Plumbing and Mechanical

Construction hiring jumped in January; value put in place climbed in December

February 16, 2006
Construction accounted for nearly one-fourth (46,000 or 24%) of the 193,000 nonfarm payroll jobs added in January, seasonally adjusted, the Bureau of Labor Statistics (BLS) reported on Friday. In addition, the total for December was revised to +4,000 from an initial estimate of -9,000.

Construction accounted for nearly one-fourth (46,000 or 24%) of the 193,000 nonfarm payroll jobs added in January, seasonally adjusted, the Bureau of Labor Statistics (BLS) reported on Friday. In addition, the total for December was revised to +4,000 from an initial estimate of -9,000. That means the industry has increased employment for 12 straight months, for a total gain of 345,000 (4.9%) to a record 7,460,000. All five BLS construction employment categories added jobs in that span. Heavy and civil engineering employment grew 6%; residential specialty trades 8%; residential building, 5%; nonresidential building, 3%; and nonresidential specialty trades. 2%. Yet the average hourly wage in construction rose only 2.2%, to $19.65, compared to a 3.3% rise for all private nonsupervisory workers.

The value of construction put in place reached $1.16 trillion at a seasonally adjusted annual rate, up 1.0% from November and 8.1% from December 2004, the Census Bureau reported on Wednesday. The figures are not adjustef for inflation. Spending in 2005 as a whole totaled $1.12 trillion, an increase of 8.9% from 2004. As was the case for most of the year, growth was well distributed among the major construction segments. From December 2004 to December 2005, public construction grew 10%, private residential rose 9%, and private nonresidential was up 6%. For the year, those categories increased 8%, 11%, and 5%, respectively. Both single- and multi-family construction increased in December, despite bad weather in some regions and worries that housing had finally begun to turn down. Compared to November, the two segments were up 0.2 and 1.0%, respectively. That was consistent with the full-year totals, which were respectively 12 and 21% higher than in 2004. The biggest public category, highway and street construction, dipped in December, perhaps because of worse than normal weather for the month, but for the year was 11% ahead of the total for 2004. The best-performing large private nonresidential segments in 2005 were multi-retail (general merchandise, shopping centers and shopping malls), +26%; manufacturing construction, +21%; and hospitals, +13%.

New orders for U.S.-manufactured goods (excluding semiconductor manufacturing) rose 1.1% in December, seasonally adjusted, the third straight increase, Census reported on Friday. Shipments increased 2.2%, the seventh rise in eight months. For 2005 as a whole, the three series were respectively 8% and 7% higher than in 2004. Unfilled orders rose for the eighth straight month, and ended the year 16% higher than in December 2004. Together, consistent increases in these series and in capacity utilization, which the Federal Reserve last month reported was near long-term averages, suggest manufacturers have reason and means to construct and expand plants. Orders for construction materials and supplies slipped 0.8% in December but rose 6% for the year as a whole. Orders for construction machinery slid 6.6% in December but jumped 18% for the year.

The American Chemistry Council (see link below), trade association for plastics and chemicals makers, noted the connection between construction and chemicals in its ACC Weekly Economic Report on Friday: “…on average, the construction sector directly purchases $8 in chemistry for every $1000 worth of output. Indirectly, it purchases more than twice that as increasing construction spending generates sales of chemistry products through purchases of supplies such as plastics pipe, architectural coatings, vinyl siding and construction products, carpet, sealants, concrete additives, etc. More than $30 billion in chemistry products goes into construction each year. Among plastic resins, PVC is most tied to building and construction.”

The Institute for Supply Management reported on its surveys of purchasing managers in manufacturing companies on Wednesay and nonmanufacturing industries, including construction, on Friday. Respondents listed the following construction-related items as up in price: aluminum, asphalt/asphalt products, cement, concrete, copper products, diesel fuel, freight charges lumber, plastics/plastic products, roofing materials (also reported down in price), and steel/steel products. Drywall and roofing materials were listed in short supply.

Nonfarm employment by metro area, not seasonally adjusted, increased in 311 areas in 2005, fell in 49, and was unchanged in seven, BLS reported on Wednesday. The largest percentage increases, 8%, were in Coeur d'Alene, Idaho, Yuba City and El Centro, California, and St. George, Utah. The largest percentage decreases were in New Orleans-Metairie-Kenner, -32%; Gulfport-Biloxi, Mississippi, -23%; and Danville, Virginia, -5%. Of the 35 areas with average employment levels above 750,000, the largest percentage gains were in Las Vegas-Paradise, 7%; Phoenix-Mesa-Scottsdale, 5%; and Orlando, 4%. The only decreases among large metro areas were -0.6% in Detroit-Warren-Livonia, and -0.1% in Cleveland-Elyria-Mentor and Indianapolis. These figures offer a rough guide to areas where construction activity is hottest or where workers may be available.

Links