The employment report reinforced the continued strength of construction shown in the Census Bureau's release on Monday of value of construction put in place in March, which set a 14th consecutive record of $1.052 trillion at a seasonally adjusted annual rate. For the first quarter of 2005 as a whole, construction exceeded the first-quarter 2004 total by 9%. Private residential construction was up 13% over the year-ago quarter, private nonresidential was up 7%, and public construction was 3% higher. The largest gains were in manufacturing construction, 31%; communication, 26%; lodging and multi-family construction, 16% each; and single-family, 14%. The broad commercial category climbed 9%, led by a 19% rise in multi-retail construction such as 'big-box” stores and shopping centers, and an 11% gain in warehouse construction. Of the two big public components, highway and street construction rose 10%; educational, 3%. Private power construction slumped another 7% from the year-ago quarter, although the smaller public power sector rose 17%.
A third indicator of construction growth appeared in Census's report on Tuesday on manufacturers' orders in March. Total orders (excluding semiconductor manufacturing) inched up 0.1%, seasonally adjusted, from February. The first-quarter total was 6.4% higher than in the first three months of 2004. Orders for construction materials and supplies climbed 1.6% for the month and 7.6% year-to-date. Orders for construction machinery plunged 15% in March, following a 5% drop in February. The quarterly total was 9.6% higher than in the same quarter of 2004.
Neither value put in place nor manufacturers' orders are adjusted for inflation. Last month, BLS reported that the producer price index for construction materials and components rose 8.2% from March 2004 to March 2005 and the index for construction machinery and equipment, 6.6%. This week, purchasing managers surveyed by the Institute for Supply Management, in releases covering manufacturing industries on Monday and nonmanufacturing on Wednesday, reported further price increases in April for aluminum and extrusions; asphalt/asphalt products and roofing products including felt, shingles, and insulation; copper, copper cable and wire; fuel, fuel surcharges, and freight; lumber and lumber products; steel and steel products. Price decreases were reported as well for steel and steel products, yet steel was cited in both reports as being in short supply. The nonmanufacturing report listed construction first (out of five industries) reporting the highest rates of increase in order backlogs, fourth for highest rates of increase in prices paid, and fifth for highest rates of slowing in supplier deliveries. But the industry was ranked 13th out of 14 reporting growth in business activity in April. One respondent was quoted, “Concern over interest rates, energy and materials costs has constrained capital plans for this construction season.”
New tables commissioned by the Small Business Administration's Office of Advocacy (www.sba.gov/advo) from Census show how the size distribution of construction firms changed from 2001 to 2002 (http://www.sba.gov/advo/research/dyn_us02.pdf). The total number of establishments (fixed locations) dipped 0.3% to 600,000. But employment dropped by 2.7% to 6.3 million. The number of establishments in tiny firms (firms with fewer than 10 employees), shrank by 1,500 (0.3%) to 462,000, but those firms added 127,000 employees (8%), bringing the total to 1,636,000. At the other extreme, there were 6,600 establishments in firms with 500 employees or more in 2002, an increase of 120 establishments (1.8%). But collectively, the giant firms reduced their employment by 67,000 (7%) to 897,000.