Submitted by the AGC
Construction employment, seasonally adjusted, totaled a record-high 7,918,000 in February, an increase of 24,000 from the January total and 249,000 (3.2%) year-over-year (y/y), according to AGC’s analysis of data the Bureau of Labor Statistics (BLS) posted today. Residential construction employment (residential building and specialty contractors) rose by 12,400 in February and 90,300 (2.8%) y/y. Nonresidential construction employment (building, specialty trade, and heavy and civil engineering construction firms) increased by 11,600 for the month and 158,700 (3.5%) y/y. Seasonally adjusted average hourly earnings for production and nonsupervisory employees in construction (craft and office) rose 6.1% y/y to $33.57 per hour. For the sixth-straight month the y/y increase in pay topped the 5.3% rise for all private-sector production employees. The “premium” for hourly construction workers rose to 18.1% over the private sector average of $28.42 but remained considerably below the average premium in 2000-2019 of 21.5%.
There were 256,000 job openings in construction, not seasonally adjusted, at the end of January, a decrease of 152,000 (-37%) y/y, BLS reported on Wednesday in its monthly Job Openings and Labor Turnover Survey (JOLTS) release. The job openings rate (openings as a percent of openings plus employees) was 3.3%, the lowest January rate since 2017. Hires for the full month totaled 362,000, an increase of 66,000 (22%) y/y. Layoffs and discharges totaled 222,000 or 2.9% of employees, the second-lowest January rate in the 23-year history of the data but up from the record-low January rate in 2022 (2.5% of employees). Quits dipped by 3,000 (1.7%) from January 2022 to 172,000. Data and comparisons for winter months can be affected by unusually mild or harsh weather. BLS does not break out residential from nonresidential construction in the JOLTS report; thus, it is not possible to determine if the drop in openings and rise in layoffs is attributable to the slump in single-family homebuilding or reflects a more widespread slowdown in construction.
The Dodge Momentum Index increased 1.9% in February and 43% y/y, after falling 9% in January, Dodge Construction Network reported on Tuesday. The index “is a monthly measure of the initial report for nonresidential building projects in planning, shown to lead construction spending for nonresidential buildings by a full year.” The commercial component rose 1.4% for the month and 55% y/y. The institutional component climbed 2.9% for the month and 22% y/y. “Commercial planning in February was bolstered by almost 20% growth in office planning activity, as data centers continued to steadily enter the planning queue. Institutional planning was driven higher by growth in education and healthcare projects, notably the continued investment in research laboratories.”
“Economic activity in the services sector expanded in February for the second consecutive month,” the Institute for Supply Management reported on March 3. Construction (including homebuilding) is among 16 sectors (out of 18) that reported paying higher prices for materials and services, along with increased business activity (14 sectors), growth in new orders (14), employment growth (10), faster supplier deliveries (10), and growth in order backlogs (5). Construction was one of four industries reporting a decrease in inventories. Items significant for construction reported up in price included copper wire, diesel fuel, lumber, oriented strand board, and steel products. Diesel fuel and steel products were also listed as down in price by some respondents, as were polyvinyl chloride (PVC) products. Items listed in short supply included construction labor, transformers (for the sixth month in a row), and appliances (three months).
“Overall economic activity increased slightly” from January 9 to February 27, the Federal Reserve reported on Wednesday in its latest “Beige Book.” The Beige Book is a compilation of informal soundings of business and nonbusiness sources in the 12 Fed districts, which are identified by the headquarters city. “Six districts reported little or no change in economic activity since the last report, while six indicated economic activity expanded at a modest pace. On balance, supply chain disruptions continued to ease.” Construction-related comments by district included: “solid demand from health care and the public sector but weaker demand for distribution center construction” (Chicago); “commercial and residential construction fell” (Minneapolis); “Nonresidential construction contacts reported that demand softened further because of high interest rates for commercial projects” (Cleveland).