Tag Archive for 'residential construction'

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Nonresidential Construction Employment Declines In December

CEU2“It is discouraging to observe losses in momentum in both the broader economy and in nonresidential construction; however construction-specific and economy-wide employment data are likely to improve in the months ahead.”—ABC Chief Economist Anirban Basu.

Employment-January2014National construction employment decreased by 16,000 jobs in December, according to a Jan. 10 report by the U.S. Department of Labor. Nonresidential construction registered the bulk of job losses, contributing 88.1 percent of total construction industry job loss and losing 14,100 positions on a monthly basis.

The national construction unemployment rate grew to 11.4 percent on a non-seasonally adjusted basis compared to 8.6 percent in November and 13.5 percent one year ago.

“It is discouraging to observe losses in momentum in both the broader economy and in nonresidential construction; however construction-specific and economy-wide employment data are likely to improve in the months ahead,” said Associated Builders and Contractors Chief Economist Anirban Basu.

Across all industries, the nation added 74,000 jobs in December, with the private sector gaining 87,000 jobs and the public sector losing 13,000 jobs. According to the Bureau of Labor Statistics’ household survey, the national unemployment rate fell from 7 percent in November to 6.7 percent in December—the lowest unemployment rate since October 2008. Unfortunately, the unemployment decline is largely due to the labor force participation rate dipping back to its cyclical October 2013 low of 62.8 percent. Labor force participation is now at its lowest rate since March 1978.

“Compounding the gloomy jobs number and the historically low labor participation rate, long-term unemployment reached 3.9 million, or 37.7 percent of the labor force,” Basu said. “While this is below the post-recession peak, it is still the higher than at any other time in the past 60 years.

“A vast majority of the jobs added in December originated in low-wage sectors,” said Basu. “Leisure and hospitality, retail trade, and temporary help services accounted for 104,700 new jobs, or 141 percent of the monthly gain. Today’s jobs report shows that the U.S. economy is not quite ready to take off.”

Nonresidential building construction employment fell by 1,200 jobs for the month but is up by 10,000 jobs (1.5 percent) since December 2012.

Residential building construction employment rose by 4,800 jobs in December and is up by 26,800 jobs (4.7 percent) on an annual basis.

Nonresidential specialty trade contractors lost 12,900 jobs for the month, but employment is up by 11,600 jobs (0.5 percent) from the same time last year.

Residential specialty trade contractors gained 1,400 jobs in December and have added 73,000 jobs (4.9 percent) from December 2012.

Heavy and civil engineering construction lost 8,800 jobs in December, but segment job totals are up by 500 (0.1 percent) on a year-over-year basis.

To view the previous Employment report, click here.

Wells Fargo Reports: Construction Spending Posts Another Gain in July

Wells_Fargo_Securities_logoConstruction spending rose 0.6 percent in July, which shows consistent improvement. While private residential and nonresidential spending increased on the month, public outlays were down 0.3 percent. Third Quarter Off to a Good Start 

Construction outlays rose 0.6 percent in July to a $900.8 billion annualized pace. Previous months’ data were also solidly upwardly revised. Further confirming upward momentum in the housing market, private residential spending was up 0.6 percent and has posted positive gains since October 2012. Digging into the details of private residential, gains were broad-based with single-family, multifamily and home improvement all increasing on10-Year Treasury Yield the month. Another encouraging component of the report was the gain in private nonresidential, which rebounded from a decline in June. Private nonresidential rose 1.3 percent in July. However, public spending remained weak due to a 0.4 percent decline in state and local outlays. Federal spending rose 1.1 percent in July.

Single-Family Outlays Remain Solid

Gains in private residential spending continue to reaffirm strength in the housing market. Builder sentiment remains solid and has shown consistent increases over the past four months. The level is now the highest since late 2005, with more builders seeing conditions as “good” than “poor”. That said, other monthly housing market indicators appear to be at odds with construction spending and sentiment. Single-family housing starts and permits both declined in July, and new home sales plunged on the month. We suspect that recent weakness in 10-Year Treasury Yieldstarts and new home sales activity is only temporary and not the beginning of a trend. Indeed, while some of the slowdown on the month can be blamed by the rapid increase in mortgage rates, we suspect that extremely damp weather in the South attributed to some of the weakness in new home sales activity. With the housing recovery continuing to be driven by fundamentals, we expect further gains in single-family outlays in the coming months.

Multifamily spending has also seen a string of positive gains. The apartment vacancy rate is now at its lowest level in more than a decade at 4.3 percent, and demand remains fairly robust across the country. Deliveries are expected to pick up in the coming quarters and activity should remain solid.

Nonresidential Construction Outlays Improve10-Year Treasury Yield

Private nonresidential outlays have been somewhat of a moving target in recent quarters with revisions quite sizeable. At last, July’s revision to previous months’ data suggest structures will contribute a little more to real GDP growth in the second quarter, all things equal. The July report also suggests that the third quarter is off to a good start. Lodging, commercial and power were some of the largest contributors to the headline. Looking ahead, architectural billings, which typically lead construction spending by about a year, posted its third monthly increase in July.

Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

Wells Fargo Reports:Housing starts fell unexpectedly in June to an 836,000-unit pace


Wells_Fargo_Securities_logoBy Mark Vitner, Senior Economist and Anika R. Kahn, Senior Economist

We suspect that rain was a key factor in recent weakness, which means that starts will be more impacted than permits. Indeed, single-family permits increased 0.6 percent, which is the third straight monthly gain. Another important point to make is that the level of permits is running ahead of starts, which suggests a ramp-up in activity is in the cards. Moreover, single-family units under construction show a more steady progression and have increased since the beginning of the year. Single-family units under construction are up 19.8 percent over the past year and increased 1.6 percent in June. Multifamily units under construction are up 38.2 percent on a year-ago basis, which also speak to continued strength in this sector.Housing starts fell 9.9 percent in June, with the decline concentrated in the multifamily component. On a regional basis, single-family starts fell in the South, where rain was likely a factor.

Housing starts fell unexpectedly in June to an 836,000-unit pace. While weakness was broad-based, much of the decline was in the volatile multifamily component, which fell 26.2 percent. Despite the monthly weakness, multifamily construction continues to be a boon for the economy, as renters shut out of the housing market due to tight lending standards continue to boost demand. In fact, multifamily starts are up 7.9 percent over the past year. Gains in apartment demand continue to be driven by the echo boomer generation and are expected to remain steady as many face extraordinary student loan debt. Moreover, the decline in multifamily appears to be a payback for the 28.2 percent jump in May. While the decline in multifamily in June is likely due to statistical noise, attention will be focused on the drop in single-family, which will raise questions whether the recovery remains sustainable.

Single-Family Decline is Much Ado About Nothing

Single-family starts fell 0.8 percent on the month, which is the third decline in four months. The decline seems to be at odds with recently reported builder sentiment. According to the Wells Fargo/ NAHB Builders’ Survey, builder confidence jumped 6 points in July, which is the third consecutive monthly increase. The increase brought the index to its highest level since January 2006. Builders are optimistic about present and future sales and buyer traffic continues to pick up. So, what is the disconnect in monthly data for sentiment versus starts?

Housing Outlook

We expect housing starts to increase to a sustainable pace of 990,000-units in 2013, with much of the gain in single-family. With single-family gaining solid footing, multifamily will begin to stabilize. We believe the trend in multifamily will continue, but starts should peak in the coming years. That said, real residential construction spending will continue to add to real GDP growth.10-Year Treasury Yield10-Year Treasury Yield10-Year Treasury Yield

Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

ABC Reports: Construction Industry Unemployment Rate Falls To 10.8 Percent

CEU2“The hope is that this number, in conjunction with overall economic expansion, will ultimately produce a more sustained and more robust nonresidential construction recovery in the months ahead.” —ABC Chief Economist Anirban Basu.

Employment-June 2013Summary

With the summer building season underway, the nation’s construction industry added 7,000 jobs in May as the unemployment rate dipped to 10.8 percent, which is down from 13.2 percent in April and the lowest rate since October 2008, according to U.S. Labor Department. Since May 2012, the industry added 189,000 jobs, or 3.4 percent.

Despite gains in every other construction sector, the nonresidential building sector lost 2,600 jobs for the month. Year-over-year, the sector added 15,300 jobs, or 2.3 percent. Nonresidential specialty trade contractors added 1,200 jobs in May and netted 51,600 workers, or 2.5 percent, since the same time last year. Heavy and civil engineering employment rose by 3,100 jobs in May and increased by 28,600 jobs, or 3.3 percent, from May 2012.

In contrast, the residential sector added 900 jobs for the month and 18,100 jobs, or 3.2 percent, during the last year. Residential specialty trade contractors added 4,600 workers for the month and 76,300 workers, or 5.2 percent, on a year-over-year basis.

Overall, the nation added 175,000 jobs as the private sector expanded by 178,000 jobs and the public sector shrunk by 3,000 jobs. The national unemployment rate was 7.6 percent in May, up from 7.5 percent in April, but down from 8.2 percent compared to the same time last year.


“Much of the growth in construction continues to be in residential building, as indicated in the addition of 76,300 residential specialty trade contractors during the past year,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Last month, that sector added 4,600 jobs, representing nearly two-thirds of total construction growth.

“In contrast, other construction segments have not been rebounding nearly as rapidly,” added Basu. “Nonresidential building construction actually lost 2,600 jobs last month.

“Job growth has apparently been inadequate to foment robust nonresidential construction recovery,” Basu remarked. “This may be due to a number of factors, including still high vacancy rates in a number of different product categories.

“The mix of jobs has also likely played a major role, with many of the jobs added being temporary,” stated Basu. “Temporary workers are far less likely to induce new construction than the addition of permanent workers. The trend toward elevated temporary hiring is likely to continue over the next several months as many employers learn more about the implication of the Patient Protection and Affordable Care Act on their future health care costs.

“One bit of good news for the nonresidential construction segment was the addition of 3,100 jobs last month in heavy and civil engineering construction,” Basu said. “Healthy job performance in this segment is often considered a leading indicator for a number of other construction segments.

“The hope is that this number, in conjunction with overall economic expansion, will ultimately produce a more sustained and more robust nonresidential construction recovery in the months ahead,” Basu concluded.

To view the previous Employment report, click here

AGC Reports: Construction Unemployment Drops To 10.8 Percent, Lowest May Mark In Five Years As Industry Adds Jobs And Hours For The Month And Year-Over-Year 

AGCConstruction Employers Add 7,000 Jobs between April and May 2013, 189,000 since May 2012; More People Working in Construction since August 2009; Potential for Worker Shortages Grows, Officials Caution

Construction employment increased by 7,000 in May, helping to push the industry’s unemployment rate down to the lowest May level in five years, according to an analysis of new government data by the Associated General Contractors of America. Association officials said the relatively positive jobs report for the sector underscores the need to address potential shortages of skilled workers.

“Although the monthly job gain in May was modest, both residential and nonresidential construction have been adding workers at roughly double the rate of the overall economy in the past year,” said Ken Simonson, the association’s chief economist. “At the same time, formerly unemployed construction workers are finding jobs in other sectors, retiring or going back to school. These conditions may lead abruptly to worker shortages in parts of the industry, such as welders and pipefitters.”

Construction employment in May totaled 5,804,000, an increase of 189,000 or 3.4 percent over the past year. Aggregate weekly hours of all new and existing construction employees expanded by 5.2 percent from a year earlier. The unemployment rate for workers who last worked in construction dropped to 10.8 percent from 14.2 percent in May 2012, not seasonally adjusted, and the number of unemployed construction workers shrank over the year by 259,000 to 891,000. The latest numbers were the best May figures for each series since May 2008, Simonson noted.

Employment expanded in both residential and nonresidential construction in May, Simonson observed. Residential building and specialty trade contractors added 5,500 workers for the month and 94,400 (4.6 percent) over 12 months. Nonresidential building, specialty trade and heavy and civil engineering construction firms grew by 1,700 workers in May and 95,500 (3.7 percent) from a year earlier. In a positive indicator for future construction growth, architectural and engineering services employers added 2.1 percent to their workforces over the year.

Association officials said there was still time to avoid some of the future worker shortages that will come if the industry continues to add jobs over the coming months. They urged education officials to rebuild skills-based, or vocational, educational programs designed to help prepare students for careers in construction and manufacturing. And they urged Congress and the administration to reject the arbitrary caps on construction workers that are currently included in proposed immigration legislation.

“Just as contractors found ways to cope with the downturn, we need to make sure we are able to address the challenges that will come with the sector’s eventual recovery,” said Stephen E. Sandherr, the association’s chief executive officer. “One of the biggest challenges this industry faces is limited supply of skilled construction workers available to meet the kind of demand we all hope the industry will soon experience.”