Hurricane Katrina has radically changed the outlook for construction demand and construction inputs throughout the country for an indefinite period. Katrina may significantly disrupt supplies of construction inputs including: diesel fuel, other petroleum and natural-gas products, cement (9% of cement imports in 2004 came through New Orleans and downstream ports), and tires for heavy equipment (New Orleans is an entry point for imorted rubber). Whether recovery from Katrina adds to demand for construction materials depends on the types and speed of rebuilding in damaged areas or incremental construction activity in areas where displaced people and businesses relocate. So far, the storm has pulled work crews in to plug breached levees and canals and begin restoring power, communication, water, sanitation, and transportation infrastructure. But many of these workers were pulled off other jobs rather than being new hires.
On Friday, the Bureau of Labor Statistics (BLS) reported that nonfarm payroll employment rose by 169,000, seasonally adjusted, in August, slightly less than the monthly average over the past year of 187,000. These data, like other statistics so far, are based on pre-storm activity. The unemployment rate slipped to a four-year low of 4.9%. Construction employment increased 25,000 to a record 7,262,000. That was a gain since August 2004 of 277,000 jobs (4%), more than double the 1.7% growth rate for the overall economy. All five of BLS's construction segments grew for the month and the 12-month interval: residential building, 5.3% over 12 months; nonresidential building, 2.6%; heavy and civil engineering, 4.8%; residential specialty trade contractors, 3.7%; and nonresidential specialty trade contractors, 3.8%. Average hourly earnings in construction slipped 2 cents, seasonally adjusted, from July to $19.50 in August. The latter figure was up 25 cents (1.3%) from a year before and was 21% higher than the average for all private production or nonsupervisory workers.