US & CO Construction Spending, Labor and Materials Outlook · Health care 4 1 near 0 Lodging 6 12...
Transcript of US & CO Construction Spending, Labor and Materials Outlook · Health care 4 1 near 0 Lodging 6 12...
US & CO Construction Spending, Labor and Materials Outlook
AGC/Public Owners Meeting
Denver January 24, 2018
Ken Simonson
Chief Economist, AGC of America
Headline Forecast• The US economy is strong and growing:
- 3.5% third-quarter real GDP growth, rising employment and pay
- consumer, business confidence are generally high; recession probability is low
- but home & auto sales are slowing; trade & fiscal policy concerns remain
• Contractors remain busy and confident; construction employment at 10-year high but several spending categories have slipped or stalled in past few months
• Three concerns:
- impact of trade policies on materials costs and demand for construction
- widening labor shortage, worsened by hostile immigration policy
- rising interest rates may cut demand for income-producing projects, new homes
Source: Author
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US/CO Net % who expect dollar volume of projects to be higher
17%/24% Public building 14%/26% Water/Sewer
16%/-3% Highway 13%/14% Private Office
16%/27% K-12 school 12%/-3% Manufacturing
16%/5% Hospital 11%/-2% Higher Education
15%/-2% Retail, Warehouse, Lodging 10%/6% Power
15%/12% Federal (e.g., VA, GSA, USACE, NAVFAC) 5%/-7% Multifamily Residential
14%/11% Transportation (e.g., transit, rail, airport)
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AGC members’ expectations for 2019—US & CO
Source: AGC 2019 Outlook Survey, Jan. 2019
Construction spending & employment, 2006–2018
$0.00
$0.20
$0.40
$0.60
$0.80
$1.00
$1.20
$1.40
2006 2008 2010 2012 2014 2016 2018
10/17–10/18% change:
Total: 4.9%
Private res: 1.8%
Private nonres: 6.4%
Public: 8.5%
0
2
4
6
8
2006 2008 2010 2012 2014 2016 2018
10/17–10/18% change:Total: 4.7%
Nonres: 4.4%
Res: 5.3%
Spending put in place, Feb. ‘06 (prior peak)–Oct. ‘18trillion $, seasonally adjusted annual rate
Employment, April ’06 (peak)–Oct. ‘18millions, seasonally adjusted
10/18 Total: $1.31 trillion(9% above ‘06 peak)
Private residential(21% below ‘06 peak)
Public(5% below ‘09 peak)
Private nonresidential(11% above ‘08 peak)
Nonresidential(0.3% above ‘18 peak)
Residential (17% below ‘06 peak)
10/18 Total: 7.3 million(5% below peak)
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Source: spending--U.S. Census Bureau; employment--Bureau of Labor Statistics
2017vs. 2016
Jan–Oct ’18 vs.Jan–Oct ’17 2019 forecast
Nonresidential total (public+private) -0.5% 5.2% 2-5%
Power (incl. oil & gas field structures, pipelines) -5 3 3-8%
Educational 1 3 0-5%
Highway and street -4 6 3-8%
Commercial (retail, warehouse, farm) 12 4 0-5%
Office -1 9 0-5%
Manufacturing -13 -3 near 0
Transportation 4 17 5-10%
Health care 4 1 near 0
Lodging 6 12 near 0
Sewage & waste disposal -12 9
Other--amusement; communication; religious; public safety; conservation; water: 11% of ‘17 total 3 6
Nonresidential spending by segment: 2017-2018 change and 2019 forecast
Source: U.S. Census Bureau construction spending report; Author’s forecast
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'17 '18
$0
$10
$20
$30
'08 '16 '17 '18
Construction spending: industrial, heavyannual total, 2008–16; monthly (seasonally adjusted annual rate), 1/17–10/18; billion $
$0
$30
$60
$90
$120
'08 '16 '17 '18
Manufacturing (99% private in 2017)
Oct. ‘17–Oct. '18: 3% (chemical 1%; other 4%)
other
chemical
Communication (99.5% private in 2017)
Oct. ‘17–Oct. '18: -5%
Source: U.S. Census Bureau construction spending report
'17 '18
$0
$10
$20
$30
'08 '16
Amusement & recreation (55% private in 2017)
Oct. ‘17–Oct. '18: 16% (private 8%; public 28%)
public
private
Power (94% private in 2017)
$0
$30
$60
$90
$120
'08 '16
Oct. ‘17–Oct. '18: 9% (oil & gas 17%; electric 7%)
electric
oil & gas
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total
total
total
Key points: power & energy, mfg, amusement, communication
• Solar, wind power are growing again; expect more gas-fired plants, natural gas pipelines in ‘19
• Manufacturing construction should recover further in ‘19 based on energy projects, U.S. economic growth; but tariffs, foreign retaliation, rising construction costs are major concerns
• Amusement & recreation spending is very “lumpy”—a few big stadiums at irregular intervals; but funding for local, state, federal parks keeps eroding
• Communication may revive as wireless firms build out 5G networksSource: Author
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'17 '18
$0
$30
$60
$90
$120
'08 '16
$0
$10
$20
$30
'08 '16 '17 '18
Construction spending: public worksannual total, 2008–16; monthly (seasonally adjusted annual rate), 1/17–10/18; billion $
$0
$10
$20
$30
'08 '16 '17 '18
Highways (99.8% public in 2017)
Oct. ‘17–Oct. '18: 5%
Sewage/waste & water (sewage 99% public in 2017; water 98% public in 2017)
Oct. ‘17–Oct. '18: Sewage/waste 8%, water 23%
Conservation and development (99.7% public in 2017)
Oct. ‘17–Oct. '18: 0.5%
Source: U.S. Census Bureau construction spending report
$0
$20
$40
$60
'08 '16 '17 '18
Transportation facilities (air, transit, rail, water)
Oct. ‘17–Oct. '18: 13% (air 34%; other 1%)
air
other
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total
sewage/waste
water
Key points: roads, transportation, sewer/water• State highway funding and P3s gradually increasing; no federal
infrastructure bill likely in 2019
• Many new and ongoing public & private airport projects; revival of freight rail construction; but no net increase likely in public funding for port, passenger rail or transit construction
• Water & sewer/wastewater spending returning to 2011-15 levels after large drop in 2016-17; little long-term new funding likely
• Conservation will grow if Corps of Engineers can award enough $
Source: Author
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$0
$25
$50
$75
$100
'08 '16
$0
$10
$20
$30
$40
$50
'08 '16 '17 '18
Construction spending: education, health careannual total, 2008–16; monthly (seasonally adjusted annual rate), 1/17–10/18; billion $
'17 '18
Education: (state/local K-12, S/L higher; private)
Oct. ‘17–Oct. '18: 9% (state/local preK-12 12%; state/local higher ed 4%; private 8%)
state/local preK-12
private
state/local higher ed
Health care: (private hospital, S/L hospital, other)
Oct. ‘17–Oct. '18: -1% [private hospital 4%; S/L hospital 2%; other (special care, medical office, federal) -8%]
state/local hospital
private hospital
Source: U.S. Census Bureau construction spending report
total (78% public)total (78% private)
Other
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Key points: education & health care• Rising house & commercial property values are supporting school district
tax receipts & bond issues for preK-12 projects
• Higher-ed enrollment declined 21% from 2011 to 2016; likely decrease in full-tuition foreign students will hurt budgets; apts. (multifamily) replacing dorms (educational construction)
• Rising stock prices help private school & college capital campaigns
• Despite recent rebound in hospital spending, health care spending is shifting to special-care facilities (urgent care, surgery, rehab, hospices)
Source: Author
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'17 '18
$0
$20
$40
$60
$80
'08 '16
Construction spending: developer-financedannual total, 2008–16; monthly (seasonally adjusted annual rate), 1/17–10/18; billion $
$0
$20
$40
$60
$80
'08 '16 '17 '18
$0
$10
$20
$30
$40
'08 '16 '17 '18
Retail (private)
Oct. ‘17–Oct. '18: -9%
Office (88% private in 2017)
Oct. ‘17–Oct. '18 : 15% (private 16%; public 5%)
Public
Private
Total
Warehouse (private)
Oct. ‘17–Oct. '18: 14%
Lodging (private)
Source: U.S. Census Bureau construction spending report
$0
$10
$20
$30
$40
'08 '16 '17 '18
Oct. ‘17–Oct. '18: 18%
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Key points: retail, warehouse, office, hotel, data centers
• Retail now tied to mixed-use buildings & renovations, not standalone structures; ongoing store closings imply downturn continuing in ‘19
• Warehouse growth is still benefiting from e-commerce; more local than huge regional distribution centers likely in future; self-storage is booming
• Office growth is slowing; employment still rising but space per worker is shrinking; more urban & renovation work than suburban office parks
• Hotel pipeline is still growing but sector is very interest-rate sensitive
• Data centers remain a strong niche but no data available on how strong
Source: Author
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Private residential spending: slower single-family growth, pickup in multifamilyannual total, 2006–16; monthly (seasonally adjusted annual rate), 1/17–10/18; billion $
'17 '18
Spending put in place (billion $)
Multifamily(1% below Mar ‘16 peak)
Source: U.S. Census Bureau construction spending report
-10%
-5%
0%
5%
10%
15%
20%
25%
30%
2017 2018
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mo
nth
% c
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Improvements: 0.4%
Single-family: 2%Multifamily: 3%
Private total: 2%
12-month % change
Private residential total(18% below Feb ‘06 peak)
Single-family(40% below Feb ‘06 peak)
Improvements(10% below Apr ‘18 peak)
10/17–10/18:
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$0
$100
$200
$300
$400
$500
$600
'06 '16
Residential spending forecast--2018: 5-6% growth; 2019: 5-9% (12% in 2017)
• SF--2018: 6-7% growth; 2019: 6-10% (11% in 2017); rising interest rates, building costs, student debt will limit number of potential buyers
• MF--2018: near 0; 2019: 2-5% (-2% in 2017)
– occupancy rates, rents have leveled off; but permits are rising, implying rebound in 2019
– millennials are staying longer in cities and denser suburbs where MF construction is bigger share of market than in outer suburbs
– nearly all MF construction is rental, not condo; more high-rises
• Improvements--2018: 6-8% growth; 2018: 5-10% (19% in 2017); rising number of seniors prefer remodeling to moving but interest cost, labor scarcity are barriers
Source: Author
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Population change by state, July 2017–July 2018 (U.S.: 0.62%)
AK -0.3%
1.5%
1.1%
0.4%
2.1%
0.9%
-0.2%
2.1%
1.7%
1.4%
0.1%
0.6%
1.0%
0.6%
0.0%
0.3%
1.3%
0.8%
0.4%
0.3%
-0.2%
0.4%
-0.4%
0.2%
0.5%
0.3%
-0.1% 0.3%
0.2%
-0.3%
0.1%
0.6%
1.1%
1.0%
1.5%
0.3%
-0.6%
0.4%
1.9%
HI-0.3%
1.3%
VT0.3%
CT-0.03%
RI0.1%
DE1.0%
NJ0.2%
MD0.3%
DC1.0%
NH0.5%
decrease 0-0.49% 0.5-0.99% 1.0-1.49%
MA0.6%
1.5%+
Source: U.S. Census Bureau
0.9%
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CT17%
-3%
4%
8%
3%
1%
4%
15%
12%
12%
-0.1%
6%
12%
9%
5%
1%
1%
6%
5%
7%
-1%
2%
7%
2%
7%
10%
3%
0% 4%
7%
4%
0.4%
4%
11%
7%
-2%
3%
4%
1%
HI-4%
-5%
VT2%
MD2%
DC3%
NH9%
Over -10% -5.1% to -10% -0.1% to -5% 0.1% to 5%
MA2%
State construction employment change (U.S.: 4.0%) 12/17 to 12/18: 43 states and DC up, 6 down
5.1% to 10% Over 10%
Shading based on unrounded numbers
0%
Source: BLS state and regional employment report
4%NJ
0.1%DE7%
RI5%
3%
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Top 5
CT 16.9%
WY 14.9%
AR 12.5%
NV 12.3%
ND 11.6%
Bottom 5MO -1.0%
ME -2.1%
AK -2.5%
HI -4.8%
SC -5.0%
Metro construction employment change (U.S.: 4.0%) 12/17 to 12/18: 273 (78%) of 358 metros up, 48 unchanged, 37 (12%) down
Source: BLS state and regional employment report
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Top 5Weirton-Steubenville, WV-OH 28%
Hartford-West Hartford-East Hartford, CT NECTA 23%
Bridgeport-Stamford-Norwalk, CT NECTA 23%
Lewiston, ID-WA 23%
Detroit-Dearborn-Livonia, MI Div. 20%
Bottom 5Lawrence-Methuen Town-Salem, MA-NH NECTA Div. -9%
Abilene, TX -7%
Wichita Falls, TX -7%
Elmira, NY -7%
Charleston, WV -6%
Over -10% -5.1% to -10% -0.1% to -5% 0.1% to 5% 5.1% to 10% Over 10%0%
0
20
40
60
80
100
120
140
160
180
200
1990 1995 2000 2005 2010 2015
In t
ho
usa
nd
s
Colorado Construction Employment1/90–12/18 (seasonally adjusted; shading = recessions)
Source: BLS
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Peak: Feb ‘18
172,700
-0.1%169,5001% below peak
12/17–12/18
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
2008 2010 2012 2014 2016 2018
12
-mo
nth
% c
han
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Construction Employment Change from Year Ago1/08–12/18 (not seasonally adjusted)
Colorado 2.4%
Source: BLS
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Denver-Aurora-Lakewood* 2.1%
U.S. 4.1%
12/17–12/18:
*The Bureau of Labor Statistics combines construction, mining and logging employment for metro areas in which mining and logging have few employers.
Change in construction employment, 12/17–12/18 (NSA)
Source: AGC rankings, calculated from BLS state and area employment reports
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Metro area or division12-mo. empl.change (NSA)
Rank (out of 358)
Statewide (Construction) 0%
Statewide (Mining, logging, and construction)* 2%
Boulder* 7% 91
Colorado Springs* 7% 91
Denver-Aurora-Lakewood* 2% 239
Fort Collins* 6% 113
Grand Junction* 5% 150
Greeley* 7% 91
Pueblo* 3% 205*The Bureau of Labor Statistics combines construction, mining and logging employment for metro areas in which mining and logging have few employers. To allow comparisons between states and their metros, not seasonally adjusted statewide data is shown for both construction-only and combined employment change.
Construction employment change by CO metro, 7/17–7/18
22
Over -10%
-5.1% to -10%
-0.1% to -5%
0.1% to 5%
5.1% to 10%
Over 10%
Shading based on unrounded numbers
0%
Source: BLS state and regional employment report
22
Greeley
Colorado Springs
Denver-Aurora-Lakewood
Pueblo
Grand Junction
Fort Collins
Boulder
278,000
375,000
0
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Unemployment
Openings
11/18
3.6%3.7%
0%
1%
2%
3%
4%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
12-mo % change in construction average hourly earnings
Job openings rate in construction
11/18
Construction job openings rate has been growing as pay accelerates (Nov. data, 2009-18)
Construction workforce indicators (not seasonally adjusted)
Source: Bureau of Labor Statistics
Construction openings: all-time high; unemployment: all-time low (Nov. data, 2009-18)
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Outlook 2019: Over 4 out of 5 CO firmsexpect to increase headcount in 2019
Source: AGC 2019 Outlook Survey, Jan. 2019
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13%
84%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Decrease
No change
Increase
Outlook 2019: CO Firms with staffing challenges face higher costs and delays
Source: AGC 2019 Outlook Survey, Jan. 2019
25
15%
28%
38%
47%
32%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
No impact/Stay the same
We have put longer completion times intoour bids or contracts
We have put higher prices into our bids orcontracts
Projects have taken longer than weanticipated
Costs have been higher than weanticipated
12-month change in producer price index for key inputs
Source: Bureau of Labor Statistics
9%
41%
10%
8%
5%
6%
19%
0% 10% 20% 30% 40% 50%
Copper & brass millshapes
Diesel fuel
Aluminum mill shapes
Steel mill products
December 2017–December 2018 December 2016–December 2017
-6%
11%
6%
3%
3%
3%
10%
0% 10% 20% 30% 40% 50%
Lumber &plywood
Gypsumproducts
Ready-mixedconcrete
Pavingmixtures
-4%
0%
26
5.3%
3.8%
3.9%
-2%
0%
2%
4%
6%
8%
2016 2017 2018
12
mo
nth
% c
han
ge
Materials & labor costs are rising faster than bid prices
PPI for inputs to construction
Average hourly earnings for all construction employees
PPI for nonresidential building
12-month % change, not seasonally adjusted: Jan. 2016 – Dec. 2018
Source: Bureau of Labor Statistics
12/17–12/18
27
2017-2018 summary and 2019 forecast
*Jan.-Oct. 2017 to Jan.-Oct. 2018
2017actual
2018actual
2019 forecast
Total spending 4% 5.1%* 5-8%
Private – residential 12% 5%* 5-9%
– nonresidential 1% 4%* 3-6%
Public -3% 7%* 2-5%
Goods & services inputs PPI 4.4% 3.8% 4-6%
Wages & salaries (avg. hourly earnings) 3.1% 3.7% 3.5-4.5%
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AGC economic resources(email [email protected])
• The Data DIGest: weekly 1-page email (subscribe at http://store.agc.org)
• monthly press releases: spending; producer price indexes; national, state, metro employment with rankings
• yearly employment & outlook surveys, state and metro data, fact sheets: www.agc.org/learn/construction-data
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Source: Ken Simonson, Chief Economist, AGC of America, [email protected], from Bureau of Economic Analysis (GDP); Census Bureau (spending,
small business); ConstructConnect (starts); Bureau of Labor Statistics (jobs, pay, occupations); AGC (rankings, workforce survey). November 30, 2018
The Economic Impact of Construction in the United States and Colorado
Economic Impact of Construction:
• U.S. gross domestic product (GDP)—the value of all goods and services produced in the country—totaled $19.3 trillion in 2017; construction contributed $826 billion (4.3%). In Colorado, construction contributed $20.4 billion (5.9%) of the state’s GDP of $343 billion, more than the industry’s 4.3% share of U.S. GDP.
• Construction wages and salaries in 2017 totaled $436 billion in the United States, including $10.1 billion in Colorado.
Nonresidential Construction Spending:
• Nonresidential spending in the U.S. totaled $714 billion in 2017 ($438 billion private, $277 billion public).
• Private nonresidential spending in Colorado totaled $7.5 billion in 2017. State and local spending totaled $6.5 billion.
• Nonresidential starts in Colorado totaled $8.3 billion in 2017 and $6.4 billion in 2016, according to ConstructConnect.
Construction Employment (Seasonally Adjusted):
• Construction (residential + nonresidential) employed 7.3 million workers in October 2018, an increase of 330,000 (4.7%) from October 2017, but 5.3% less than in April 2006, when U.S. construction employment peaked.
• Construction employment in Colorado in October 2018 totaled 171,500, an increase of 4.3% from October 2017, but 1% less than the state's peak in February 2018.
• Construction unemployment is near a series low. In AGC’s August 2018 workforce survey, 80% of firms in the U.S. and 80% in Colorado reported difficulty filling hourly craft worker positions.
Construction Industry Pay:
• In 2017, pay for all construction industry employees in the U.S. averaged $60,700, 10% more than the average (mean) for all private-sector employees. Pay for construction industry employees in Colorado was $59,400 in 2017, 4% more than the state average for all private-sector employees.
• Four out of the five most numerous construction occupations in Colorado had higher median pay than the median for all employees in the state. (Half of workers earn more than the median; half earn less.)
Small Business: • The United States had 669,000 construction firms in 2015, of
which 92% were small (1 to 19 employees). Colorado had 16,900 construction firms in 2015, of which 92% were small.
5 most numerous construction jobs and median annual pay in Colorado
Occupation
Number of employees
Median annual pay
Pay relative to median
All occupations 2,555,300 $40,880 Construction Laborers 21,250 $34,850 -15% Electricians 15,070 $52,340 +28% First-Line Supervisors of Construction Trades and Extraction Workers 14,280 $66,490 +63% Carpenters 13,750 $43,910 +7% Operating Engineers and Other Construction Equipment Operators 9,950 $48,330 +18%
Empl. Change by Metro (not seasonally adjusted) Rank (out of 358) Metro area or division 10/17–10/18
Statewide (Construction) 4%
Statewide (Mining, logging, and construction)* 6%
Boulder* 8% 80
Colorado Springs* 7% 112
Denver-Aurora-Lakewood* 4% 197
Fort Collins* 7% 112
Grand Junction* 1% 272
Greeley* 13% 15
Pueblo* 3% 232
*The Bureau of Labor Statistics combines construction, mining and logging employment for metro areas in which mining and logging have few employers. To allow comparisons between states and their metros, not seasonally adjusted statewide data is shown for both construction-only and combined employment change.
0
50
100
150
200
1990 1995 2000 2005 2010 2015
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-30%
-15%
0%
15%
30%
2008 2010 2012 2014 2016 2018
12
-mo
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% c
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Peak: Feb '18
U.S. 4.7% Colorado 4.3% (26 out of 51)
Colorado Construction Employment, 1/90–10/18 (seasonally adjusted; shading = recessions)
Construction Employment Change from Year Ago 1/08–10/18 (seasonally adjusted)
10/17–10/18
www.agc.org/learn/construction-data
Vol. 19, No. 3 · January 15-18, 2019
Construction employment increased in 43 states, D.C. in 2018; ‘bid price’ PPI rose 5.3%
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. Th
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 [email protected].
“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.
Data DIGest is a weekly summary of economic news. All rights reserved. Sign up at http://store.agc.org. Editor: Ken Simonson, Chief Economist, AGC, [email protected]