Price Increases, Supply Disruptions Continue; 32 States Top Pre-pandemic Employment Levels

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Submitted by the AGC.

Impacts from Russia’s attack on Ukraine and Western nations’ countermeasures continue to affect construction materials prices and supplies. In the past two weeks, readers have forwarded notices of exceptionally large price increases for a variety of structural steel shapes, tubing, and prestressing strand. Three ductile iron pipe producers announced they would index their prices for the first time (based to scrap prices). Imports of scrap steel, pig iron, and Turkish cement have been slowed or disrupted. The Tennessee Department of Transportation issued a memorandum on March 15 reporting that “cement manufacturers and/or suppliers have informed industry of potential allocations being put in place across Tennessee. This situation is causing some ready-mix producers to in turn have to limit the amount of concrete they can supply their customers.” Disruptions in supplies of clay from Ukraine and soaring natural gas (fuel) prices caused Italian and Spanish ceramic tile manufacturers to suspend production. Readers are invited to send price and supply chain information to ken.simonson@agc.org.

Seasonally adjusted construction employment in February topped the February 2020 level in 32 states and lagged in 18 states and the District of Columbia, according to AGC’s analysis of BLS data posted today. (February 2020 was the month in which employment peaked nationally before plunging during widespread shutdowns in March and April 2020.) Florida added the most construction jobs over two years (14,100 jobs, 2.4%), followed by Utah (13,600, 12%), Tennessee (11,400, 8.6%), and Missouri (9,500, 7.4%). Idaho had the largest percentage gain (13%, 7,200 jobs), followed by Montana (12%, 3,800 jobs), Utah, Tennessee, Mississippi (8.4%, 3,800), and Missouri. New York shed the most construction jobs over two years (-26,500 jobs, -6.5%), followed by Texas (-19,700, -2.5%) and Pennsylvania (-16,000 jobs, -6.0%). The largest percentage losses were in North Dakota (-6.8%, -1,900 jobs), New York, Pennsylvania, and Oklahoma (-5.5%, -4,500). For the month, construction employment increased in 39 states, declined in nine states and D.C., and was unchanged in Alaska and Louisiana. (BLS reports combined totals for mining, logging, and construction in D.C., Delaware, and Hawaii. Because there are few, if any, mining or logging jobs in these locations, AGC treats the levels and changes as solely construction employment).

The Census Bureau on Thursday posted estimates of metro and county population changes from July 1, 2020 to July 1, 2021. An accompanying article listed notable changes in net domestic migration (the number of people moving into an area minus the number moving out) from one year earlier among combined statistical areas (CSAs). Such changes, if sustained, can be a driver of demand for housing and various types of nonresidential construction. “Of the top 15 CSAs with increases in net domestic migration, seven were in the South and four in the West, while the Northeast and Midwest each had two CSAs.” Four of the five CSAs with the largest increases in net in-migration were already growing rapidly: Cape Coral-Fort Myers-Naples, Fla. (1st, with net in-migration of 25,000 in 2020 and 36,000 in 2021, for a net increase of 11,000); North Port-Sarasota, Fla. (2nd, with an increase of 10,000); Salt Lake City-Provo-Orem, Utah (4th, increase of 8,000); and Boise-Mountain Home-Ontario, Idaho-Ore. (5th, with an increase of 8,000). But the third-largest change was in Hartford-East Hartford, Conn., which went from a net outmigration of 7,000 to a net in-migration of 2,000 (increase of 9,000). The sixth-largest change was in Fayetteville-Sanford-Lumberton, N.C. (from -1,000 to 5,000, an increase of 6,000). Net outmigration slowed by 6,000 in Detroit-Warren-Ann Arbor, Mich. and by 5,000 in Cleveland-Akron-Canton, Ohio. In contrast, net outmigration increased steeply in New York-Newark, N.Y.-N.J.-Conn.-Pa. (from -233,000 to -378,000, an increased outflow of 145,000); San Jose-San Francisco-Oakland (outmigration increase of 94,000); Los Angeles-Long Beach (outmigration increase of 56,000); and Seattle-Tacoma (change from net in-migration of 18,000 to net outmigration of -25,000, a swing of 43,000). These changes occurred in the height of the pandemic; it remains to be seen which metros will have persistent gains or losses.

Construction starts (in dollars, not adjusted for inflation), increased 1.9% year-over-year (y/y) in February, not seasonally adjusted, data firm ConstructConnect reported on March 18. Nonresidential building starts climbed 1.3% y/y, with commercial starts up 3.9%, institutional starts down 12%, and industrial (manufacturing) starts up 136%. Engineering (civil) starts leaped 43% y/y, with road/highway up 55%, water/sewage up 9.8%, power and other miscellaneous up 104%, bridges up 49%, dams/marine down 13%, and airports up 7.2%. Residential starts slumped 11% y/y, with single-family up 3.5% and apartments down 39%.

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,” edged up to 51.3 in February–the 13th consecutive reading above 50–after holding at 51.0 for two 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) varied greatly: the scores rose for firms with a predominantly commercial/industrial practice (to 55.4 from 53.7 in January) and residential (52.6 vs. 51.6). Scores slipped for firms with mixed practices (53.8 vs. 56.9) and institutional (47.2, the third-straight reading below 50, down from 47.4 in January.)

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