Construction employment is flat in September but several other indicators are negative

The two principal indicators of construction activity this week signaled an industry treading water. Today the Bureau of Labor Statistics reported that payroll employment, seasonally adjusted, fell by 43,000 in September after an upwardly revised rise in August of 107,000 (reported a month ago as 39,000). Construction employment, at 6,552,000, was down 1,000 from the (unrevised) August figure and down 122,000 from September 2001. Of BLS's three construction segments, general building contractors employed 1,469,000 in September (up 7,000 or 0.5% from September 2001); heavy construction, except building, employed 895,000 (down 29,000 or 3%); and special trade contractors employed 4,188,000 (down 100,000 or 2%). Construction workers' average hourly earnings rose over the year by 3%, from $18.51 to $19.06, but average weekly earnings climbed by only 2.2% as average weekly hours slipped.

The Census Bureau reported Tuesday that the value of construction put in place in August totaled $830 billion at a seasonally adjusted annual rate. That was 0.4% below the July total and 1.1% below the number for August 2001. Compared to August 2001, construction of residential buildings (including improvements to existing houses) was up by 4%; nonresidential building construction was off by 19%; and public construction was up by 8%.

Several indicators showed a weakening manufacturing sector. BLS said today, "Manufacturing employment decreased by 35,000 in September. Job losses have accelerated over the last 2 months, following a moderation in declines between March and July." The Institute for Supply Management (ISM) said Tuesday its PMI (purchasing managers' index) slipped in September to 49.5 from 50.5 in August. ISM stated: "A reading above 50 indicates the manufacturing economy is generally expanding; below 50 indicates that it is generally contracting¿The September PMI indicates that the overall economy is growing, but the manufacturing sector is in decline." Wednesday the Business Council's semiannual survey of large-company CEOs showed an even split between those expecting capital expenditures to remain stable or decline in the next six months. Yesterday the Census Bureau reported that seasonally adjusted new orders for manufactured goods (excluding semiconductors) in August were unchanged, following a surge of 4.4% in July and a plunge of 2.5% in June. Orders for construction machinery rose 0.9% in August, following an increase of 6.5% in July and a drop of 9.3% in June. New orders for construction materials and supplies fell 1.1% in August after rising 1.7% in July and falling 1.9% in June.

Yesterday ISM said, "In September, non-manufacturing business activity increased at a faster rate than in August" as its non-manufacturing index rose from 50.9 to 53.9. However, reports were mixed: 10 sectors reported increased business activity, four (including construction) decreased, and two were unchanged. Construction was listed among industries reporting contraction of orders, reduction of employment, faster deliveries, declining order backlog and highest rate of increases in prices paid.

The Wall Street Journal reported Wednesday that "The nation's office-vacancy rate continued to climb in the third quarter, hitting almost 16%, according to a new survey" by Reis Inc., compared with 15% in the second quarter, 12% a year ago, and an all-time high of 19% in 1991. "On the plus side, the deterioration has slowed considerably. Vacancies rose only 0.4 percentage point, after rising 0.6 in the second quarter and one full point in the first, Reis said. Also, the rate that tenants gave up more space than they rented, so-called negative absorption, slowed to 5.6 million square feet, from 8.5 million in the second quarter and 22.3 million in the first." The Census construction report showed that office construction was off by 4.6%, seasonally adjusted, from August to September and by nearly 25% since September 2001. The lack of a federal terrorism insurance backstop is adding to downward pressure on office and other construction. The Real Estate Roundtable raised its estimate of projects stopped by lack of such insurance to $15.5 billion from $10.5 billion just four weeks before.

Wednesday's Journal also quoted stock analysts who track apartment REITs. One said "Construction activity has only declined slightly despite the abundance of vacant space," and a second said, "While demand trends [for apartments] remains anemic, the continued pressure of new construction could further erode market fundamentals" through 2003.

Did you enjoy this article? Click here to subscribe to Plumbing & Mechanical. 

Recent Articles by Ken Simonson

You must login or register in order to post a comment.



Image Galleries

2014 Truck of the Month

PM has featured so many great plumbing service trucks! See plenty of them here in our Truck Of The Month Archives page. Are you proud of your truck? Go to our Truck of the Month page to find out how your service truck could be chosen!

5/28/15 2:00 pm EDT

Efficient Variable Speed Pump Selection & Control

This webinar will help to answer questions like: "How many pumps should our system use?" and "How should we sequence (stage) on additional pumps?"

Plumbing and Mechanical


2015 April

In this month's issue of PM, check out articles about Sloan Valve, including a PM profile on Sloan Valve president and CEO Jim Allen

Table Of Contents Subscribe

Where do you look for new employees?

Where do you look for new employees?
View Results Poll Archive

The Plumbing and Mechanical Store

2015 National Plumbing & HVAC Estimator

Every plumbing and HVAC estimator can use the cost estimates in this practical manual!

More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.


Connect to PM on Facebook Connect to PM on Twitter  Watch PM on YouTube    Connect to PM on Linked InGoogle+

Truck of the Month

Truck of the month

Are you proud of how your service truck looks? Do the graphics give people whiplash as they drive by? Have your calls increased because people remember your truck — and your company name? If so, we’d like to see it, too! Click here to find out how your service truck could be chosen as PM's Truck of the Month.