Tag Archive for 'non-residential'

According to ABC, Jobs Report Offers Reasons for Hope and Concern for Construction Industry

National construction employment added 11,000 net new jobs on a seasonally adjusted basis in May according to analysis of U.S. Bureau of Labor Statistics data released today by Associated Builders and Contractors (ABC).

The nonresidential construction sector added 4,400 net new jobs in May after losing 1,000 net jobs in April (revised down from a net increase of 3,200 jobs), while the residential sector added 7,100 net jobs for the month. Overall construction employment expanded 2.9 percent on yearly basis, well above the year-over-year growth rate of 1.6 percent for all nonfarm industries.

“Today’s jobs numbers supply a mixture of good and bad news,” said ABC Chief Economist Anirban Basu. “Overall nonresidential construction industry employment was up, but much of that was due to the heavy and civil engineering component, which can be associated with volatile employment levels from month-to-month. Nonresidential specialty trade contractors collectively shed employment, which is consistent with the weak construction spending numbers released yesterday. Those statistics indicated ongoing softening in construction spending in both private and public segments.

“More worrisome perhaps are statistics related to labor force participation and the construction industry unemployment rate,” said Basu. “The labor force participation fell to 62.7 percent in May, a multi-month low. There is also evidence that the construction labor market continues to tighten, which implies construction firms will continue to struggle to find workers, particularly at higher skill levels. This means that construction spending growth is decelerating even as labor becomes more expensive. None of this is good from the perspective of profit-margins or aggregate industry profitability.

“The hope is that the observed weakness in spending is brief and largely a result of lingering uncertainty that would be associated with any major political transition,” said Basu. “Financial markets continue to perform brilliantly, implying that investors continue to view economic conditions favorably. With the construction unemployment rate remaining so low one further hopes that more job seekers will be induced to seek employment in the construction trades. Unfortunately, to date that has not happened at sufficient levels. That said, economists remain confident that the next two quarters will be associated with more robust growth, which could help to reinvigorate construction spending momentum.”

The construction industry unemployment rate, which fell 2.1 percentage points last month, declined further in May and now stands at 5.3 percent. The construction industry unemployment rate is only available on a non-seasonally adjusted basis. Due to seasonal factors, the industry unemployment rate almost always plummets from March to April and continues to decline in May. The national unemployment rate inched down from 4.4 percent in April to 4.3 percent in May. The last time the unemployment rate was this low was in May 2001.

ABC Says: Nonresidential Construction Spending Slips to Start 2017

Nonresidential construction spending contracted during January, according to analysis of U.S. Census Bureau released today by Associated Builders and Contractors (ABC). Nonresidential spending fell 1.9 percent from December to $698.4 billion on a seasonally adjusted, annualized basis. This represents the first month total nonresidential construction spending dipped below $700 billion since July 2016.
Despite the monthly setback, year-over-year progress remains intact, with nonresidential spending increasing 1.5 percent since January 2016. However, in real terms, that represents virtually nonexistent growth. Private nonresidential spending remained unchanged for the month, while public sector spending plunged 4.7 percent. The greatest loss in spending volume occurred in the public safety, water supply and conservation and development segments.
“The significant loss in public construction spending momentum is hardly novel,” said ABC Chief Economist Anirban Basu. “For several years, public funding for construction activity has been flat and erratic. Public budgets remain constrained by underfunded pensions, surging Medicaid expenditures, and other non-infrastructure-related needs.
“The new president’s speech on Tuesday night discussed the need for additional infrastructure investment,” said Basu. “If the president is able to implement his public-private partnership plan, public construction spending is set to soar. However, there are many obstacles to his plan coming to fruition.

“Private construction spending was also soft in January, but the outlook remains upbeat,” said Basu. “Corporate confidence is high, architects became much busier during the period immediately following the presidential election, and capital from banks and other sources should be broadly available to developers during the year ahead.”

January 2017 Nonresidential Construction Spending

ABC Reports: Construction Lost Jobs in December

National construction employment declined by 3,000 net jobs on a seasonally adjusted basis in December, according to analysis of  U.S. Bureau of Labor Statistics data released today by the Associated Builders and Contractors (ABC).

The industry added 102,000 net new jobs on a year-over-year basis, the smallest increase in more than four years. Of the five subsectors, only residential specialty trade contractors added jobs in December (11,700 net new jobs). Nonresidential construction lost 13,400 net jobs for the month, largely due to losses in heavy and civil engineering, which lost 8,900 jobs. These data are adjusted for seasonal variations, which means that one cannot simply blame the poor job performance on the transition from November to December.

“A terrific nonresidential construction spending report arrived earlier this week, leading to expectations of a more upbeat assessment of the construction employment situation than provided by today’s report,” said ABC Chief Economist Anirban Basu. “The spending report indicated that nonresidential spending expanded to $712.4 billion on a seasonally adjusted, annualized rate in November, representing the highest level of spending in eight years.

“One possible way to reconcile seemingly contradictory data is to point out that construction firms are reporting greater difficulty filling available positions,” said Basu. “More than 80 percent of ABC members report difficulty finding appropriately skilled labor. Accordingly, many construction firms are required to do more with fewer people, which should eventually show up in construction productivity data that reflect the amount of output generated by the average worker on a per-hour-worked basis.

“The significant number of jobs lost in the heavy and civil engineering segment indicates that U.S. spending on infrastructure remains low,” said Basu. “For much of the year, the level of spending in publicly-financed segments was stuck in reverse, and today’s data indicate that increased investment in the shared built environment is much needed.

“There were jobs lost in privately-financed segments as well,” said Basu. “Employment in nonresidential building construction dipped by 1,300 in December. While that’s not a massive loss, it is somewhat surprising given data regarding construction spending, including in the office and lodging segments.”

The construction unemployment rate expanded by 1.7 percentage points in December and stands at 7.4 percent.  This figure, however, is not seasonally adjusted, and construction industry unemployment has increased from November to December during each of the prior sixteen years by an average of 2 percentage points. The national unemployment rate ticked higher to 4.7 percent in December. That statistic is seasonally adjusted.

December 2016 Construction Employment

ABC Reports: Nonresidential Construction Growth on Pace with Strong July Jobs Report

1291931467352794367The U.S. construction industry has rebounded strongly, adding 14,000 net new jobs in July according to an analysis of Bureau of Labor Statistics data released today by Associated Builders and Contractors (ABC). This gain comes after the construction sector lost a combined 27,000 jobs from April to June. The construction industry’s unemployment rate inched lower in July, shedding a tenth of a percentage point to reach 4.5 percent, the industry’s lowest unemployment rate since October 2006.

The nonresidential sector accounted for a majority of July’s gains, adding 11,500 net new jobs. The residential sector remained stagnant for the month, adding only 700 net new positions. Heavy and civil engineering employment, which lost 8,800 jobs from January to June, experienced a modest rebound in July by adding 1,900 net new jobs.

“After several months of disappointing construction spending and employment data, today’s release was most welcome,” said ABC Chief Economist Anirban Basu. “If there is a slowdown in construction, it appears to be in residential as opposed to nonresidential activity. Today’s release provides evidence that the nonresidential construction recovery has not yet stalled.

“While hiring in July was strong both in the broader economy and in key nonresidential construction segments, ongoing job creation exacerbates the issue of rampant skilled labor shortage,” said Basu. “The construction employment rate is now down to 4.5 percent. The implication is that wage pressures continue to build. Therefore, contractors will likely need to more aggressively pass along cost increases to purchasers of construction services in order to simply maintain their current level of profitability.

“For now, America’s economic recovery remains in place,” said Basu. “Not only does the economy continue to add jobs, but labor force participation has begun to rise again. This should position America’s ongoing consumer-led expansion to continue, creating demand for commercial construction and other forms of construction in the process.”

The economy-wide unemployment rate remained unchanged at 4.9 percent. The nation’s labor force expanded by 407,000 persons for the month. This represents the largest growth for the month of July since the labor force expanded by 587,000 persons in July 1996.

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Additional ABC Economic Analysis:

Construction Spending

Construction Employment

 

ABC Reports: Nonresidential Construction Spending Down Again in June, First Annual Decline Since 2013

1291931467352794367Nonresidential construction spending dipped 1 percent in June and has now contracted for three consecutive months according to analysis of U.S. Census Bureau data released today by Associated Builders and Contractors (ABC). Nonresidential spending, which totaled $682 billion on a seasonally adjusted, annualized rate, has fallen 1.1 percent on a year-over-year basis, marking the first time nonresidential spending has declined on an annual basis since July 2013.

“On a monthly basis, the numbers are not as bad as they seem, as May’s nonresidential construction spending estimate was revised higher. However, this fails to explain the first year-over-year decline in nearly three years,” said ABC Chief Economist Anirban Basu. “There are many forces at work, most of them negative, with the noteworthy exception of construction materials prices, which are down on a year-over-year basis. To the extent that savings are being passed along to purchasers of construction services, spending would appear lower in dollar terms than when measured in physical terms such as square footage.

“Thanks in part to the investment of foreign capital in America, spending related to office space and lodging are up by more than 16 percent year-over-year,” said Basu. The global economy is weak, and international investors are searching for yield and stability. U.S. commercial real estate has become a popular destination for foreign capital. However, the weakness of the global economy may also help explain the decline in manufacturing-related construction spending of nearly 5 percent for the month and more than 10 percent year-over-year.

“Though many contractors continue to report extensive backlog, the data suggest that average firm backlog may begin to retrench,” warned Basu. “The only significant driver of economic growth in America presently is consumer spending. Corporate profits remain stagnant and business investment remains underwhelming. Public sector spending does not appear positioned to accelerate anytime soon despite the passage of a federal highway bill last year.”

Precisely half of the 16 nonresidential subsectors expanded in June. Two of the largest subsectors—manufacturing and commercial—experienced significant contractions in June, however, and were responsible for a majority of the dip in spending.

Tepid spending by public agencies also continues to shape the data. Despite a monthly pick-up in spending, water-supply construction spending is down 14 percent on a year-over-year basis. Public safety construction spending is down 8.4 percent from a year ago, sewage and waste disposal by nearly 15 percent, highway and street by about 6 percent, education by 4 percent and transportation by more than 3 percent.

Chart_8_1_16 Spending_8_1_16

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