Construction job gains led February employment report; U.S., Mexico sign cement deal

Nonfarm payroll employment increased 243,000, seasonally adjusted, in February, the Bureau of Labor Statistics (BLS) reported. Construction employment rose by 41,000, or one out of every six new jobs (one out of five private-sector jobs), to 7,512,000. Over the past 12 months, construction employment increased 346,000 (4.7%), triple the growth rate for all nonfarm payroll jobs (1.5%). Employment rose for the month and year in all five construction categories: residential and nonresidential building (3.9% and 3.2%, respectively, over 12 months), residential and nonresidential specialty trades (7.6% and 2.2%), and heavy and civil engineering construction (7.2%). Some of the growth might be attributable to projects begun in the mild, dry weather of January or levee reconstruction work in New Orleans, but the growth is consistent with monthly rates throughout the last year or more. Seasonally adjusted average hourly earnings for construction workers rose 2.2% over the past 12 months to $19.70 per hour in February. That was 20% higher than the $16.47 average for all private nonsupervisory or production workers.

A new report from the Construction Labor Research Council on union wage and fringe increases supports the BLS data on modest wage gains in construction. The report found that rates rose by 3.9% in 2005, comparable to the 4% increase in 2004. “Based upon the increases already negotiated in [close to 600] contracts for the next two years, wage and fringe increases will continue at a similar pace. Already known increases in effect for both 2006 and 2007 are 3.9%.” Responses to last week's Data DIGest questions about changes in construction labor market tightness and compensation varied widely, even within a metro area. Construction employment has risen nationwide, as shown by the data for January that BLS released regarding state employment by industry. Compared to January 2005, construction employment rose in 46 states, was virtually unchanged in Vermont, and fell in only three states - Louisiana (-10%), Michigan (-1%), Connecticut (-0.9%), and the District of Columbia (-2%). The largest percentage increases were in Idaho (17%), Nevada (16%), Hawaii and Mississippi (14% each), Arizona and Kansas (13% each). The disparate results for Louisiana and Mississippi reflect big differences in physical conditions, business and government responses following Hurricane Katrina. In Mississippi, debris clearing and rebuilding began immediately, aided by quick passage of a state law to allow casinos to relocate 800 feet in from their former coastal positions.

“In Biloxi, a city of 50,000 that lost three-quarters of its structures to Katrina, the three casinos that have reopened did $63 million of business in January-close to the $83 million taken in by the city's nine gambling venues a year ago,” the Washington Post reported. “Mayor A.J. Holloway expects that casino operators will more than double their pre-Katrina presence of 15,000 jobs and 7,000 hotel rooms in the region ... Overall, housing will take years to recover, but progress is visible. Power has been almost fully restored; more than 80% of displaced families have received temporary housing; and federal advisory flood maps - which dictate required elevations and availability of flood insurance for rebuilding - were released in November, after Katrina hit. In New Orleans, only about 34% of residents in the city of 460,000 are back and drawing power. Temporary housing is available to about half the 98,000 families who need it to return to the region and rebuild, and [Federal Emergency Management Agency] maps were not due until this month at the earliest, paralyzing homeowners, city planners and lenders.”

The U.S. and Mexico on Tuesday signed an agreement (posted at www.ita.doc.gov) to phase out the 16-year-old anti-dumping duty on Mexican cement. Beginning April 3, the current duty of $26 per metric ton will fall to $3, but imports from Mexico will be limited to 3 million metric tons, to be further allocated by region. (In 2005 the U.S. imported 2.2 million metric tons, despite a duty of more than $32.) These conditions will apply for three years. As of April 1, 2009, Mexican cement, like cement from other countries, will be allowed into the U.S. without duty or limit. To encourage more sources of supply, the agreement directs Mexico to reserve at least 6% of its export limit for new exporters. AGC had pressed for an end to the duty and asked for flexibility when it became clear quotas would be part of the package. The final deal allows for an upward adjustment in years two and three, carryovers and carrybacks by each region, and an extra 200,000 metric tons if there is increased U.S. demand for cement in connection with a declaration of a state of emergency as the result of a disaster.

The Census Bureau and the National Institute on Aging recently issued “65+ in the United States: 2005,” a report combining data on demographics, health, finances and education of older Americans. Among the trends with implications for what types of construction will be built, and where: The U.S. population age 65 and over is expected to double in size within the next 25 years. The health of older Americans is improving. The financial circumstances of older people have imporved dramatically, although there are wide variations in income and wealth. Florida, Pennsylvania, and West Virginia have the highest percentages of older people.