GDP, McGraw-Hill data show investment in structures slowed in 4th quarter, December
The broadest measure of inflation, the GDP price index, rose just 1.1%, down from 1.6% in the third quarter and level with the second-quarter rate. In a commentary this morning, Wachovia's John Silvia noted that consumer durables and business equipment “faced deflation in 2003. Other sectors (consumer services) faced steady inflation at 2.8% while several sectors faced rising inflation (exports and imports, nondurable goods, and state and local spending).” The price index for nonresidential structures accelerated to a 4.1% inflation rate from 2.7% in the third quarter and 1.1% in the second.
The value of new construction contracts signed in December dropped 2% to a $533 billion SAAR, McGraw-Hill Construction reported Thursday. (McGraw-Hill figures cover about 60% of the total value of construction put in place, which the Census Bureau will report on February 2. The McGraw-Hill data measure the full value of new contracts; Census counts the current month's value of ongoing work.) ”Single-family housing [increased] 3% in December, while multifamily housing retreated 19%. For all of 2003, residential building climbed 12%...single-family up 12% and multifamily up 10%....
“Nonresidential building in December retreated 3%. School construction, the largest nonresidential structure type by dollar volume, fell 10% for the month…For 2003 as a whole, nonresidential building fell 3%..., a decrease less severe than the 9% drop in 2002. Weakness was still present for commercial construction, which was down 6% in 2003 due to an 11% decline for offices and a 16% decline for warehouses….Of significance, the commercial sector in 2003 was cushioned by the growth reported for stores [7%] and hotels [8%]….The institutional side of the nonresidential market in 2003 was generally weaker, reflecting the impact from a tighter fiscal climate. Although school construction was able to rise 3% in dollar terms, helped by more renovation work, square footage for this structure type fell 6% during 2003. Construction of healthcare facilities dropped 7% in dollar terms….Reduced construction was also present for public buildings (courthouses/ detention facilities), down 6%; transportation terminals, down 7%; amusement-related projects, down 9%; and churches, down 13%. The long-depressed manufacturing plant category posted a dollar volume gain of 8% in 2003, helped by a growing number of plant upgrades. The 2003 level for manufacturing construction was still 59% below the most recent peak in 1997.
“Nonbuilding construction in December dropped 9% from the strong voume reported for the previous month…For all of 2003, nonbuilding construction fell 9% to $90.8 buillion, reflecting a 6% decline for public works and a 30% plunge for electric utilities. Highway and bridge construction registered a 3% reduction in new starts, a noteworthy change after the steady growth during the 1999-2002 period. On the environmental side, sewers managed to rise 1%...but both water supply systems and river/harbor development were down 13%.”
Total compensation costs for civilian workers rose 0.7% from September to December, seasonally adjusted, moderating from the 1.0% gain from June to September, the Bureau of Labor Statistics (BLS) reported Thursday. Benefit costs increased 1.2%; wages rose just 0.5%. For the year, compensation costs in private industry rose 3.4%, vs. 3.7% in the year ended in December 2002. Compensation costs in construction rose 0.6% in the fourth quarter and 0.8% in the third, with wages rising just 0.3% (0.9% in the third quarter). For the year, compensation in construction rose 2.5% in 2003 and 3.1% in 2002.
Sales of new single-family houses in December were at a SAAR of 1,060,000, down 5% from the upwardly revised November rate, the government reported Wednesday. For the year, sales rose to 1,086,000, up 11.5% from the previous annual record set in 2002. The median sales price rose 3.1% for the year.