Vol. 3, No. 40
Sept. 29-Oct. 3, 2003
Reports in the past three days paint an unusually consistent picture of the economy: widespread expansion but not in manufacturing or inventories. Today the Bureau of Labor Statistics (BLS) reported that seasonally adjusted nonfarm payroll employment grew by 57,000 in September, the first rise in eight months, although the unemployment rate remained at 6.1%. The job-loss estimate for August was halved from 93,000 to 41,000. BLS commented, “Construction employment continued to trend up. Since February, the industry has added 137,000 jobs, with most of the gains among special trade contractors”; those firms added 4,000 jobs for the month and 83,000 since September 2002. Employment in the “construction of buildings” segment rose by 7,000 and 28,000 for the two periods. Heavy and civil engineering construction rose by 2,000 for the month but fell 2,000 from September 2002. In all, the industry added 14,000 for the month and 109,000 (1.6%) over 12 months, while the rest of the nonfarm economy added 43,000 for the month but lost 536,000 (0.4%) since September 2002.
Average weekly hours worked by construction workers slipped to 38.4 in September, seasonally adjusted, from 38.6 in August and 38.7 in September 2002. Seasonally adjusted average hourly earnings in construction climbed 2% over the year to $19.02, 23% above the average for all private industry production workers.
The Institute for Supply Management (ISM) reported today that its index of non-manufacturing purchasing managers remained strong in September at 63.3, the second-highest number in the survey's six-year history after the record 65.1 set in July and tied in August. Fourteen sectors reported increased business activity, two were unchanged, and none shrank. Construction was listed second among industries reporting growth in employment, third among those reporting the highest rates of increase in prices paid, and fourth among those reporting the highest rates of growth in backlog of orders. “Construction materials” were listed among items reported higher in price but “building materials” were among those with reported price declines.
Record residential construction pushed up the overall value of construction put in place by 0.2% in August to a seasonally adjusted annual rate of $882.7 billion, just shy of January's record rate of $883.2 billion and 4% above the August 2002 mark, the Census Bureau reported Wednesday. Private residential construction surged 1.4% for the month and 7% for the 12-month period. Public construction was up 0.6% and 3.2%, respectively. But private nonresidential construction fell 2.7% and 1.2%, respectively.
New construction starts in August retreated 1% and was level for the first eight months of 2003 compared to the same period of 2002, McGraw-Hill Construction Dodge reported Wednesday. Dodge measures the entire value of new contracts, while Census counts the amount spent each month. Dodge's residential building total rose 2% and 9% for the two periods. Nonresidential building was down 1% and 5%, respectively, while nonbuilding construction was off 12% and 16%, respectively.
New orders for manufactured goods, seasonally adjusted, declined 0.8% in August following three straight increases, including 2% and 1.9% rises in July and June, respectively, Census reported Thursday. Inventories of manufactured durable goods fell for the 30th time in 31 months, hitting the lowest level since 1995. Orders for construction materials and supplies fell 1.6% in August and in the January-August 2003 period compared to January-August 2002. Orders for construction machinery tumbled 14% in August after a 22% leap in July; year-to-date, those orders are up 2.1% compared to January-August 2002.
The ISM survey of manufacturing purchasing managers showed the manufacturing sector improved in September for the third month in a row, though at a slightly more gradual pace (53.7) than in August (54.7).
Personal income rose a seasonally adjusted 0.2% in August, down from 0.3% in July and 0.4% in June, the Bureau of Economic Analysis reported Monday. Personal consumption expenditures climbed 0.8%, following rises of 0.9% and 0.7%. Spending in June-August was boosted by cuts in withholding and federal tax “rebate” checks, the last month of which was mailed in August.
President Bush signed a bill Tuesday that extends federal spending through October, generally at the same rate as in fiscal 2003 (which ended September 30). Highway grants to states continue at a $31.6 billion rate, although the full-year appropriations bill that Congress is working to finish is expected to raise that total to $33.8 billion for fiscal 2004 as a whole.
Health insurance costs will vary widely in 2004, the Miami Herald reported Wednesday. “After getting hit with 70% increases last year, the average FPL [parent of Florida Power & Light] employee will see only a 5.1% increase, including premiums and co-payments….those choosing the least expensive FPL health maintenance organization will see only a 2% cost rise….Meanwhile, Miami-Dade County, which employs 31,000, has told workers with families that they will face brutal increases…ranging from 10 to 40%, depending on the plan”.
The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics.
