Gap Remains Year-Over-Year; August Job Openings Soar
Submitted by the AGC
Unusually, materials costs and contractors’ bid prices both declined from August to September, but the gap between the two prices remained wide over the latest 12 months. The producer price index (PPI) for new nonresidential building construction—a measure of the price that contractors say they would charge to build a fixed set of buildings—dipped by 0.1% from August but increased 5.0% year-over-year (y/y) since September 2020, while the PPI for material and service inputs to new nonresidential construction slipped 0.3% for the month but soared 19.7% y/y, the Bureau of Labor Statistics (BLS) reported on Thursday. The decline in the input PPI was due mainly to lumber and plywood, which plunged for the third-straight month, by 11%, and by 12% y/y. In addition, the PPI for copper and brass mill shapes declined 1.1% in September, but it jumped 40% y/y. Other materials continued to rise in price, with double- or even triple-digit percentage increases y/y. The PPI for steel mill products climbed 5.0% for the month and 134% y/y; diesel fuel, 4.9% and 89%, respectively; aluminum mill shapes, 3.8% and 35%; plastic construction products, 1.4% and 30%; gypsum products, 0 and 23%; insulation materials, 1.7% and 19%; truck transportation of freight, 0.8% and 15%; asphalt felt and coatings, 0.1% and 12%; and architectural coatings, 0.4% and 11%. There were smaller but nevertheless unusually large y/y increases for flat glass, up 0.3% for the month and 7.2% y/y; asphalt paving mixtures and blocks, 0 and 5.7%, respectively; concrete products, 0 and 5.6%; and construction machinery and equipment, 0 and 5.4%. Bid prices, as measured by PPIs for new buildings and subcontractors, have risen at diverse rates. PPIs rose 7.1% y/y for new warehouse building construction, 5.9% for offices, 5.1% for health care buildings, 4.9% for industrial buildings, and 3.2% for schools. PPI increases for new, repair, and maintenance work ranged from 6.5% for concrete contractors to 6.4% for roofing, 6.1% for plumbing, and 4.3% for electrical contractors. AGC posted tables and graphs of construction PPIs.
There were 344,000 job openings in construction, seasonally adjusted, at the end of August, the Bureau of Labor Statistics (BLS) reported on Monday in its latest Job Openings and Labor Turnover Survey (JOLTS) release. Openings represented 4.4% of the open and filled positions. Both numbers were the highest in the 21-year history of the series. Construction openings jumped by 94,000 (38%) y/y. Hires totaled 381,000, a decline of 17,000 (-4.3%) y/y. Layoffs and discharges totaled 159,000, a drop of 46,000 (-22%) y/y, with a layoff rate of 2.1 per 100 employed, the lowest August rate in series history. Quits more than doubled over the year, from 95,000 in August 2020 to 199,000, with a quit rate of 2.7%, the highest August rate since 2005. Together, the record-high openings and decline in layoffs suggest that the dip in hiring reflects the difficulty contractors are experiencing in filling positions, not shrinking demand for workers.
Two privately collected measures of construction starts showed very positive results for September. Total construction starts rose 10% from August to September at a seasonally adjusted annual rate, data firm Dodge Construction Network reported today. Over the first nine months of 2021 combined, starts increased 13% compared to January-September 2020. Nonresidential building starts rose 15% for the month and 7% year-to-date. Commercial starts increased 8% year-to-date; manufacturing starts, 38%; and institutional starts, 2%. Residential starts rose 9% from August to September and 25% year-to-date, with single-family starts up 26% and multifamily starts up 20%. Nonbuilding starts increased by 6% for the month but were essentially unchanged year-to-date. Environmental public works were 24% higher; highway and bridge starts, 2% lower; miscellaneous nonbuilding, -14%; and utility/gas plant starts, -10%.
Construction starts, not seasonally adjusted, rose 7.4%, not seasonally adjusted, from August to September and 7.3% year-to-date, data firm ConstructConnect reported on Thursday. Nonresidential starts jumped 13% for the month but remained down 2.3% year-to-date. Nonresidential building starts soared 31% for the month but were down 4.9% year-to-date, with commercial starts down 9.1% year-to-date, institutional starts down 10%, and industrial [manufacturing] starts up 42%. Heavy engineering (civil) starts tumbled 14% for the month but increased 1.7% year-to-date (including road/highway, 8.0%; water/sewage, 8.2%; power and other miscellaneous, 4.8%; bridges, -21%; dams/marine, -11%; and airports, -8.8%). Residential starts climbed 1.1% for the month and soared 21% year-to-date (single-family, 27%, and apartments, 8.8%).
Housing starts (units) fell 1.6% at a seasonally adjusted annual rate from August to September and but rose 7.4% y/y from the September 2020 level, the Census Bureau reported today. Year-to-date starts for January-September 2021 rose 20% from the same months in 2020. Single-family starts were unchanged for the month but rose 20% year-to-date. Multifamily (five or more units) starts sagged 5.1% for the month but rose 18% year-to-date. Residential permits slumped 7.7% from August but rose 23% year-to-date, as single-family permits slipped 0.9 % for the month but leaped 21% year-to-date, while multifamily permits plummeted 21% for the month but soared 27%, respectively. The number of authorized multifamily units that have not started—an indicator of potential near-term starts–jumped 43% y/y.