Construction employment

Construction Employment, Pay Climb in February; Job Openings Shrink in January but Hires Jump

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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).

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Construction Employment, Wages Rise in September

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Job Openings Set Record; Many Lead Times Worsen

Construction employment, seasonally adjusted, totaled 7,719,000 in September, an increase of 19,000 from the downwardly revised August rate and 292,000 (3.9%) year-over-year (y/y), according to AGC’s analysis of data the Bureau of Labor Statistics (BLS) posted today. Residential construction employment, comprising residential building and specialty trade contractors, rose by 6,400 in September and 110,500 (3.60%) y/y. Nonresidential construction employment—at building, specialty trades, and heavy and civil engineering construction firms—climbed by 13,100 for the month and 181,500 (4.2%) y/y. Average hourly earnings for production and nonsupervisory employees in construction (craft and office) rose 6.7% y/y to $32.83 per hour. That was the steepest y/y increase in 40 years and exceeded the 5.8% increase for all such private-sector employees. The “premium” for hourly construction workers narrowed rose to 18.2% over the private sector average of $27.77 but remained considerably below the average premium in 2000-2019 of 21.5%. The number of unemployed jobseekers with construction experience fell by 98,000 (22%) y/y to 346,000, and the industry’s unemployment rate, not seasonally adjusted, declined from 4.5% to 3.4%, the second-lowest rate in the 23-year history of the series.

There were 437,000 job openings in construction, not seasonally adjusted, at the end of August, an rise of 47,000 (12%) from August 2021, BLS reported on Tuesday. That was the largest August total in the 22-year history of the series and the 18th consecutive month of rising y/y openings. Hires rose by 4,000 (1.1%) y/y to 378,000. Layoffs and discharges decreased by 33,000 (20%) y/y to 129,000, the lowest level yet for August. Quits jumped by 46,000 (20%) to 281,000, the highest for any month in series history.

Of the 602 respondents to AGC’s 2022 Buy America Materials Survey, posted on Thursday, 93% reported they were “currently experiencing long lead times and/or allocations (less-than-full shipments) for construction materials.” For all 24 categories of materials and manufactured products, a majority reported longer lead times in the past year than before. Most firms believe that meeting new Buy America requirements will be a difficult task. Steel, nonferrous metal, plastic products, electrical equipment, and heating, ventilation, and air conditioning (HVAC) systems were the materials most likely to have been chosen by respondents as unlikely to be able to be sourced domestically. Those same materials were also the most common answers in which the answer of “Lead time was longer than before” was chosen, indicating that there has been no improvement in their availability. For each of these materials, over 75% of respondents indicated they were experiencing longer delivery lead times compared to a year before.

Every aggregates and concrete supplier reported they had “been able to gain additional price increases over the past 2-3 months,” investment research firm Thompson Research Group reported on Thursday in its Q3 Heavy Materials Survey. “Fall price increases (the third for the year) now is a mixed bag. Fall aggregate price increases are now being implemented on a market-by-market basis. Fall cement pricing actions have now been pushed to early 2023 (January)….Supply chain remains challenging – All we can say is it’s not much better. Sure, lead times for certain categories of equipment have improved. But on whole, managing supply chain has become an exercise of being pretty happy with ‘less bad’.”

“Economic activity in the services sector grew in September for the 28th month in a row,” the Institute for Supply Management reported on Wednesday. All 18 sectors reported an increase in prices paid. Construction (including homebuilding) is among those that reported growth (15 sectors), employment growth (10), growth in order backlogs (10), and slower supplier deliveries (16 sectors). Construction was one of two industries reporting no change in business activity, new orders, and supplier deliveries. Items significant for construction reported up in price included concrete, drywall, electrical equipment, construction labor (2 months in a row), pipe and fittings, steel products (21 months but also reported down for 2 months), and transformers. Diesel fuel, lumber, and polyvinyl chloride (PVC) products also were listed as down in price. Items listed in short supply included appliances; HVAC equipment; plastic pipes and fittings; and transformers.

Construction delays affected 90% of the 41 multifamily owners and developers in the National Multifamily Housing Council’s Q3 survey, posted on September 29. There were large increases in the shares of respondents listing as reasons for a delay in starts “project is not economically feasible at this time” (53% of respondents, vs. 38% in the Q2 survey), “economic uncertainty” (41% vs. 19%), and “availability of construction financing” (31% vs. 15%). There was little change in the share of respondents listing “materials sourcing and delivery” (53% vs. 58%) or “staffing shortages” (31% vs. 27%). Compared to three months ago, respondents reported median price increases for electrical components (panels and items with chips) of 10%; exterior finishes and roofing, 6%; appliances and insulation, 5% each. (Half of the panel reports increases above, and half below, the median.) The Dodge Momentum Index rose 5.7% in September from August and 26% y/y, Dodge Construction Network reported today. The index “is a monthly measure of the initial report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.” The institutional component of the Momentum Index rose 12% for the month and 28% y/y. The commercial component increased 2.9% and 25%, respectively.

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U.S. Construction Adds 11,000 Jobs in July, Nonresidential Still Far Below Pre-Pandemic Levels

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Construction employment – both nonresidential and residential – totaled 7.42 million as of July 31, an increase of 1.5 percent over June, but the lion’s share of that gain came from hiring in the residential sector.

AGC of America Chief Economist Ken Simonson said soaring materials costs, long or uncertain delivery times and hesitancy by nonresidential project owners to commit to construction are the factors contributing to a still-stalled pace of commercial construction across the U.S.

The numbers hail from an August 6 government data analysis by the AGC.

“Recovery has been especially slow in infrastructure construction,” Simonson said.

Construction employment in July represented a gain of 11,000 jobs following three months of job losses, according to Simonson, however the rebound was limited to residential and specialty trade contractors. Nonresidential building and infrastructure construction firms continued to lose workers.

Residential building contractors including single-family homebuilders added 8,399 employees in July, while employment was unchanged among residential specialty trade contractors. Simonson said the two residential segments have added a total of 58,500 employees, or 2.0 percent, to their workforce nationwide since February 2020.

In contrast, nonresidential building contractors shed 2,500 employees in July. Employment declined by 2,100 among heavy and civil engineering construction firms, the segment most connected with building and rehabbing infrastructure. Nonresidential specialty trade contractors added 7,500 employees last month.

Following the huge loss of jobs between February and April 2020 at the start of the pandemic, infrastructure-centric contractors have added back only 37 percent of lost jobs. According to the AGC analysis, nonresidential building and specialty trade contractors have each regained about 60 percent of lost workers, while the total nonfarm payroll economy has recouped 75 percent of workers.

“There are an unprecedented number of construction material price increases,” said Simonson. “The problems of these extreme price increases and long lead times for production or delivery to project sites mean fewer construction workers are being employed. Some owners are delaying project starts, adding to the drag on industry employment.”

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Construction employment falls in May; hourly earnings premium, hires decline in April; openings soar

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Construction employment, seasonally adjusted, totaled 7,423,000 in May, a drop of 20,000 from April and the third decline in the past four months, according to AGC’s analysis [ https://AGCA.informz.net/AGCA/data/images/Employment table_May_PDF.pdf ] of Bureau of Labor Statistics (BLS) data posted [ https://www.bls.gov/news.release/empsit.nr0.htm ] on Friday The May total was 225,000 (-2.9%) below the pre-pandemic peak in February 2020. The gap widened between residential and nonresidential employment gains. Residential construction employment, comprising residential building and residential specialty trade contractors, edged up by 1,900 in May, putting the total 35,000 (1.2%) higher than in February 2020. Nonresidential construction employment—building, specialty trades, and heavy and civil engineering construction—shrank by 21,800 in May and was 260,000 (-5.6%) below the February 2020 level. A total of 642,000 former construction workers were unemployed in May, a sharp decline from May 2020 but the second-highest May level since 2014. The industry’s unemployment rate in May was 6.7%, compared to 12.7% in May 2020.
 
The BLS report also covers average hourly earnings by industry, with a one-month lag for subsectors. For total construction, hourly earnings in April averaged $32.59, 8.0% more than the average for the nonfarm private sector. However, over the past two years this premium shrank by 2.2 percentage points from 10.2% in April 2019, implying that the financial attractiveness of construction may be diminishing as other sectors that are expanding faster raise pay to attract more workers. The premium diminished the most for employees of heavy and civil engineering construction firms (-4.5 points, from 16.0% above the private-sector average in April 2019 to 11.5% in April 2021), followed by residential building firms (-2.7 points, from an 8.8% premium to 6.0%), specialty trade contractors (-1.0 points, from a 6.1% premium to 5.0%), and nonresidential building firms (-0.9 points, from a 25.4% premium to 24.5%).
 
There were 357,000 job openings in construction, seasonally adjusted, at the end of April, BLS reported [ https://www.bls.gov/jlt/ ] on Tuesday in its latest Job Openings and Labor Turnover Survey (JOLTS) release. Hires in April totaled 335,000 or 4.5% of the employment total for the month. Apart from the pandemic-depressed 3.1% rate in 2020, the rate was the lowest rate of hires for April in the 21-year history of the series, while the job openings rate (4.6% of filled and unfilled jobs) was the second-highest total for any month since the series began in December 2000. That is consistent with reports from many contractors that they are having a very hard time hiring workers. (JOLTS data combines nonresidential construction with residential, and it is not possible to tell if the demand and openings are coming from both segments of the industry.)
 
The Dodge Momentum Index jumped 9.1% in May from the revised April reading, Dodge Data & Analytics reported [ https://www.construction.com/news/Dodge-Momentum-Index-Increases-In-April-2021 ] on Monday. The index “is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year….May’s jump was the result of a large increase in commercial planning activity, which posted its strongest month-over-month increase since October 2017. Institutional planning, meanwhile, fell by less than one percentage point. Commercial planning had been in a holding pattern over the last four months, but broke out in May due to several sizable data center, office, and warehouse projects that peaked in a 13-year high for the commercial component of the Momentum Index. While essentially flat in May, institutional planning remains at levels not seen since 2009. On a year-over-year basis, both commercial and institutional planning were up from May 2020 (38% and 47% respectively). The Momentum Index overall was also 41% higher than in May 2020….The rising trend in planning activity is a good sign that the economic recovery is starting to spread into the construction sector. However, these projects are unlikely to have an impact on construction starts this year. Rising material prices and a continued shortage of skilled labor have led to project delays. On the upside, construction starts are shaping up for a healthy increase in 2022.”
 
Readers continue to report materials price increases, some immediate or retroactive, and supply-chain disruptions. A reader received a notice on June 5 from a structural steel supplier that “Effective with orders received after 8:00 pm EST, Friday June 4, [m]erchant products will be increased by…$70 ton.” A commercial furniture supplier notified customers on June 8, “Foam shortages persist, and foam pricing continues to rise[, making] it necessary to adjust pricing on select pieces[, ]effective June 7.” A Texas concrete supplier wrote to customers on June 4, “Effective August 1,…we will be increasing the price of all concrete products by $3.00 per cubic yard[, ] due to labor shortages.” Readers are invited to send information to ken.simonson@agc.org [ http://ken.simonson@agc.org ] .
Steel-industry newsletter Steel Market Update [ https://www.steelmarketupdate.com/ ] reported today, “Hot-rolled coil prices charged higher yet again even as lead times stretched into August, a typically slower time of the year….Hot-rolled coil prices have hit a new all-time high of $1,675 per ton, up $55 per ton compared to a week ago and up $1,235 per ton from August of last year. Cold-rolled coil prices were up $65 per ton week-over-week, galvanized base prices gained $20 per ton, and Galvalume prices were up $70 per ton. The increases came after June prime scrap prices settled up $60 per gross ton. Plate prices, meanwhile, were unchanged….SMU’s Price Momentum Indicators, in the meantime, continue to point toward higher prices for the next 30 days.”
 
Lumber-product prices have shown mixed trends recently. Futures contracts for lumber have declined sharply for four weeks in a row, while trade publication Random Lengths [ https://randomlengths.com ] reported further record weekly highs for oriented strand board and lumber prices.

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Construction Employment Stalls in April, Materials Costs Rise Again, Inventories Shrink

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

The level of construction employment remains virtually unchanged in St. Louis and across the U.S. as commercial and residential contractors contend with a prolonged scarcity of able workers and a still-choked building materials supply chain.

Associated General Contractors of America Chief Economist Ken Simonson says finding enough workers continues to be a feat, as reflected in workforce statistics from April. Augmenting the people shortage, he adds, are problems in getting stable prices and reliable deliveries of key materials.

“Contractors are experiencing unprecedented intensity and range of cost increases, supply-chain disruptions and worker shortages that have kept firms from increase their workforces,” said Simonson. “These challenges will make it difficult for contractors to rebound as the pandemic appears to wane.”

Construction employment in the U.S. during April totaled 7.45 million, matching March’s level but 2.6 percent below the most recent peak in February 2020. Simonson said the number of former construction workers (768,000) who were unemployed in April dropped by half from one year ago, and the sector’s unemployment rate fell from 16.6 percent in April 2020 to 7.7 percent last month.

“The fact that (construction) employment has stalled – despite strong demand for new homes, remodeling of all types and selected categories of nonresidential categories – suggests that contractors can’t get either the materials or the workers they need,” Simonson said, noting that many firms are reporting backlogs and rations of key materials.

Still in short supply, according to the Institute for Supply Management’s latest survey report, are steel and steel products (for five months now), PVC products (a three-month shortage), lumber and circuit breakers.

Price spikes continue relative to copper, wire, oriented strand board, lumber, wood products, resin products, PVC products, steel, diesel, aluminum, vinyl windows and roof shingles.

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Construction employment increased in 43 states, D.C. in 2018; ‘bid price’ PPI rose 5.3%

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Submitted by the Associated General Contractors Association

Seasonally adjusted construction employment rose year-over-year (y/y) from December 2017 to December 2018 in 43 states and the District of Columbia, declined in six states and was unchanged in Mississippi, an AGC analysis of Bureau of Labor Statistics data released today showed. Texas added the most construction jobs over the year (46,800 jobs, 6.4%), followed by Florida (34,900, 6.7%), California (21,700, 2.6%), Georgia (21,500, 11%) and Arizona (18,900, 13%). Connecticut added the highest percentage of construction jobs in 2018 (17%, 9,700 jobs), followed by Wyoming (15%, 2,900 jobs), Arizona, Nevada (12%, 10,600) and North Dakota (11%, 2,900). Construction employment set a record high in five states:  Nebraska, New York, Oklahoma, Oregon and Texas. South Carolina shed the largest number and percentage of jobs (-5,100 jobs, -5.0%), followed by Hawaii (-1,800, -4.8%) and New Jersey (-2,200, -1.4%). Construction employment increased from November to December in 36 states, decreased in 11 and held steady in Alaska, Idaho, New Hampshire and D.C. (AGC’s rankings are based on seasonally adjusted data, which in D.C., Hawaii and five other states is available only for construction, mining and logging combined.)

The producer price index (PPI) for final demand in December, not seasonally adjusted, decreased 0.3% from November but increased 2.5% y/y from December 2017, the Bureau of Labor Statistics (BLS) reported on Tuesday. AGC posted tables and an explanation focusing on construction prices and costs. Final demand includes goods, services and five types of nonresidential buildings that BLS says make up 31% of total construction. The PPI for new nonresidential building construction—a measure of the price that contractors say they would charge to build a fixed set of buildings—was unchanged for the month but rose 5.3% y/y, matching the November 2017-November 2018 change as the largest 12-month increase since the series began in June 2009. Increases ranged from 4.1% y/y for warehouses to 4.5% for health care buildings, 5.6% for offices, 5.5% for schools and 5.9% for industrial buildings. Increases in PPIs for subcontractors’ new, repair and maintenance work on nonresidential buildings ranged from 0.6% y/y for roofing contractors to 4.8% for plumbing contractors, 5.0% for electrical contractors and 6.2% for concrete contractors.

The PPI for inputs to construction—excluding capital investment, labor and imports—comprises a mix of goods (56%) and services (44%). This index decreased 0.8% for the month but increased 3.8% y/y, the second-straight month in which the “bid price” PPI increased more than the input cost PPI. Increases for inputs to seven nonresidential structure types were similar, ranging from 3.4% for power and communication structures to 4.6% for highways and streets. PPIs for inputs to new residential structures rose 3.5% y/y for single-family and 3.9% for multifamily. The PPI for services inputs to construction rose 4.4%, compared to a 3.7% increase in 2017. The index for goods inputs (including items consumed by contractors, such as diesel fuel) climbed 3.5%, down from 5.0% in 2017, as the PPI for energy inputs fell 3.9% in 2018 after rising 21% in 2017.

The PPI for goods less food and energy increased 4.8% in 2018, up from 3.3% in 2017. Inputs important to construction that had large one- or 12-month price changes include steel mill products, down 0.9% for the month but up 19% y/y; diesel fuel, -12% and 5.0% asphalt felts and coatings, 1.8% and 11%, respectively; asphalt paving mixtures and blocks, 0 and 10%; architectural coatings, 0.3% and 7.2%; truck transportation of freight, 0.4% and 6.8%; aluminum mill shapes, -0.4% and 63%; insulation materials, -0.5% and 5.1%; diesel fuel, -12% and 5.0%; and copper and brass mill shapes, 1.3% and -5.6%. Readers are invited to send copies of price-change notices to simonsonk@agc.org.

“Spending on nonresidential buildings nationally is projected to grow by 4.4% this year, paced by healthy gains in the industrial and institutional building sectors,” American Institute of Architects chief economist Kermit Baker wrote on Wednesday, reporting the consensus of eight forecasts. “For 2020, growth is projected to slow to 2.4%, with essentially no increase in spending on commercial facilities but gains in the 3% range in the industrial and institutional categories. Still, there is growing concern inside and outside of the industry that a broader economic downturn may be materializing over the next 12 to 24 months. Continued healthy gains in construction activity in the near-term is the projection of the [panel. They] see the 2018 growth rate remaining essentially unchanged for this year. However, the composition will change significantly. Last year, spending on commercial facilities increased around 7% while advancing by about half that rate for institutional buildings and declining for the industrial sector. This year, gains in each of the major building sectors are expected to be in the 3-5% range.”

“Economic activity increased in most of the U.S., with eight of 12 Federal Reserve districts reporting modest to moderate growth,” the Federal Reserve reported on Wednesday in the latest “Beige Book,” based on information collected from late November through January 7. The Beige Book is a compilation of informal soundings of business conditions in the 12 Fed districts, which are referenced by the name of their headquarters cities. “New home construction and existing home sales were little changed, with several districts reporting that sales were limited by rising prices and low inventory. Commercial real estate activity was also little changed on balance. All Districts noted that labor markets were tight and that firms were struggling to find workers at any skill level. Minneapolis indicated that construction firms had turned down business because they could not find workers.”AGC compiled all construction-related comments.

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