Employment Rose Through March in Three-Fourths of Metro Areas, Starts Reports Mixed; ABI Jumps

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Submitted by the AGC.

Construction employment, not seasonally adjusted, rose year-over-year (y/y) from March 2021 to last month in 268 (75%) of the 358 metro areas (including divisions of larger metros) for which BLS posts construction employment data, fell in 48 (13%) and was unchanged in 42, according to an analysis AGC released on Thursday. (BLS reports combined totals for mining, logging, and construction in most metro areas, to avoid disclosing data about industries with few employers.) Houston-The Woodlands-Sugar Land again added the most jobs (9,300 construction jobs, 4%), followed by St. Louis, Mo.-Ill. (6,300 combined jobs, 10%); the Los Angeles-Long Beach-Glendale division (6,000 construction jobs, 4%); and the Dallas-Plano-Irving division (5,300 combined jobs, 4%). Cheyenne, Wyo. again had the highest percentage gain (42%, 1,300 combined jobs), followed by Bay City, Mich. (27%, 300 combined jobs); and Lake Charles, La. (24%, 3,700 construction jobs). There was a new high for February in 72 areas and a new low in two areas, (Wichita Falls, Texas and Charleston, W. Va.), in series dating in most cases to 1990.

Data firms ConstructConnect and Dodge Construction Network posted reports on Tuesday covering separately gathered data on the value of construction starts in current dollars (i.e., not inflation-adjusted). Starts increased 4.1% year-to-date for the first three months of 2022 compared to January-March 2021, not seasonally adjusted, ConstructConnect reported. Nonresidential building starts fell 13% year-to-date, with commercial starts down 12%, and institutional and industrial (manufacturing) starts each down 14%. Engineering (civil) starts leaped 22% year-to-date, with road/highway up 46%, water/sewage up 13%, power and other miscellaneous down 18%, bridges up 15%, dams/marine up 51%, and airports up 87%. Residential starts rose 7.7% year-to-date, with single-family up 10% and apartments up 0.6%. Dodge reported that total construction starts rose 9% year-to-date, with nonresidential building up 26%, nonbuilding down 1%, and residential up 3%. For the 12 months ending March 2022, total construction starts were up 15% from the previous 12 months, with nonresidential up 25%, residential up 15%, and nonbuilding down 1%.

Housing starts (units) in March rose 0.3% at a seasonally adjusted annual rate from the upwardly revised February rate and 3.9% y/y to the highest rate since 2006, the Census Bureau reported on Wednesday. Single-family starts slipped 1.7% for the month and 4.4% y/y. Multifamily (five or more units) starts rose 7.5% and 28%, respectively Residential permits increased 0.4% from February but rose 6.7% y/y. Single-family permits slid 4.8% and 3.9%, respectively. Multifamily permits jumped 11% and 34%. The number of authorized multifamily units that have not started—an indicator of potential near-term starts—soared 31% y/y.

The Architecture Billings Index (ABI), which the American Institute of Architects calls “a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months,” rose to a 10-month high of 58.0 in March–the 14th consecutive reading above 50–after holding near 51 for three months, the institute reported on Wednesday. The ABI is derived from the share of responding architecture firms that report a gain in billings over the previous month less the share reporting a decline in billings, presented on a 0-to-100 scale. Any score above 50 means that firms with increased billings outnumbered firms with decreased billings. Scores by practice specialty (based on three-month moving averages) all topped 50: 50.5 for firms with a predominantly institutional practice (up from 49.3 in February); 55.3 for commercial/industrial (down from 56.2), 57.2 for residential (up from 55.0), and 58.2 for mixed-practice firms (up from 57.3). “Indicators of future work strengthened this month as well, most notably with the value of new design contracts, which also saw strong growth. In addition, firms reported that at the end of [March, their] backlogs stood at an average of 7.2 months…an increase of more a month from one year ago and a new all-time high since we began collecting data on backlogs in 2010. This month’s special practice questions asked firm leaders about recent work at their firm on reconstruction projects, defined here as renovations, retrofits, rehabilitations, alterations, additions, and historic preservation. On average, responding firms estimated that [52%] of their total design billings over the past year…were from reconstruction projects. At firms that have derived at least some billings from reconstruction projects over the past year, the most commonly cited building elements/systems that were replaced and/or upgraded in any of these projects were interior replacements or upgrades (flooring/walls/ceilings) at 91% of firms, HVAC/mechanical (86%), lighting (84%), and exterior replacements or upgrades (roofing/windows/glazing/facades/cladding) at 80%. When asked to select the single most important goal of recent reconstruction projects, 26% selected adaptive reuse or building conversion, and 25% selected basic updating and modernization of the building interior.” Responding firms reported that an average of just 10% of their reconstruction projects in the past year were directly motivated by the pandemic.

“Economic activity expanded at a moderate pace since mid-February,” the Federal Reserve reported on Wednesday in the latest “Beige Book” summary of informal soundings of businesses in the 12 Fed districts. This edition covers information collected through April 11. The district based in Chicago reported, “Multifamily construction strengthened as demand remained robust….In the nonresidential construction sector, project costs escalated, and builders reported delays in receiving steel. Nonetheless, construction increased due to strong demand in the industrial, single-tenant retail, and medical office areas.” The New York district reported, “Construction activity remained sluggish overall, with activity reportedly hampered by unseasonably harsh winter weather, escalating construction costs, and shortages of both materials and workers. Nonresidential construction starts remained particularly sluggish, with little new activity outside the industrial and warehouse segment. Multifamily residential starts have been steady at a modest level.”

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