Broad range of indicators suggest expansion; mixed election results for construction
Vol. 3, No. 45
November 4-10, 2003
The Data DIGest
Nonfarm payroll employment grew by a seasonally adjusted 126,000 in October, the Bureau of Labor Statistics (BLS) reported Friday. In addtion, the combined August-September gain was revised up from 16,000 to 160,000. Construction employment posted its eighth straight gain, to 6,847,000. Since October 2002, the industry has added 127,000 jobs, while all other nonfarm employers shed 400,000. Of BLS's three construction subgroups, construction of buildings added 12,000 jobs (0.1%) over the year; heavy and civil engineering construction lost 5,000 (0.6%), and specialty trade contractors added 98,000 (2.3%). Average hourly earnings in construction were unchanged from September at $19.04, a 2% increase over October 2002. The figure for construction is 23% higher than the average for all private-sector production workers.
The employment gains came despite a huge, 8.1% increase in productivity in the third quarter, as BLS reported Thursday. Both hours worked and output per hour rose, indicating that productivity did not grow at the expense of the existing workforce. In contrast, in the second quarter, output per hour grew but hours shrank.
“Nonmanufacturing business activity increased for the seventh consecutive month in October,” the Institute for Supply Management reported Wednesday, based on its monthly survey of supply and purchasing executives. The overall index climbed to a near-record 64.7. “New orders, order backlogs, employment, prices, imports, and exports increased.” Construction was listed second among industries reporting the highest rates of increase in prices paid. Products reported up in price included petroleum products, PVC pipe, copper, including tubing and wire, roof shingles, plywood, and steel pipe.
Major retail chains generally reported higher same-store sales in October. Deep discounters and high-end department stores did well but other department and discount chains had weaker results.
Consumer credit expanded at a 9.7% seasonally adjusted annual rate in September, the Federal Reserve reported Friday, up from 5.5% in August and 4.1% in July.
New orders for manufactured goods (excluding semiconductor manufacturing) in September rose a seasonally adjusted 0.5%, the Census Bureau reported Wednesday. Orders for construction materials and supplies rose 1.1%, following gains of 0.8% in August and 4% in July. Nevertheless, orders for the first nine months of 2003 still lag the same period of 2002 by 0.6%. New orders for construction machinery climbed 2.1% in September, after dropping 12% in August and jumping 22% in July. Year-to-date orders are 4% ahead of the first nine months of 2002.
“The percentage of successful bond elections was the lowest since 1997,” Bond Buyer reported Wednesday. “Though some of the nation's largest bond referendums for economic development and water projects failed in Tuesday's election, large school districts across the country fared better, with voters approving a large number of bond measures to build and renovate schools.” Other successful issues cited by the paper: $200 million of general obligation bonds for dam repairs and flood control in New Jersey; a $640 million bond authorization toward creating a $7.5 billion light-rail system in the Houston area that is contingent on securing federal matching funds; $148 million for hospital construction in El Camino, California; and $89 million in bond authorizations for transportation, education and environmental projects in Maine.
In tax referendums: “Voters in Tucson rejected a proposal to increase the city's regular sales and construction taxes to fund a light rail transportation system and improved bus service,” according to Thursday's Daily Report for Executives. Voters in Kansas City, Missouri “overwhelmingly approved a 3/8-cent hike in the transit sales tax to raise roughly $110 million to bail out the Metro bus service” but rejected a ½-cent increase to pay for streetcars and a light-rail system, Bond Buyer reported. The paper also said the New Mexico legislature approved a bond and tax package that authorizes the NM Finance Authority to issue nearly $1.6 billion of debt backed by state revenues and federal funds. The state revenues will come from a 3-cent boost in the diesel tax and more than quadrupling of the cost of annual permits for long-haul truckers.
This afternoon, the Federal Reserve issued its annual revision of industrial production and capacity utilization for factories, mines, and utilities. Output of construction supplies from the fourth quarter of 2002 to the third quarter of 2003 fell at seasonally adjusted annual rate of -1.8%, 1% better than initially estimated.
The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics. All rights reserved.