PPIs and state jobs news were mixed.

Prospects for residential construction remain dismal. Today, the government reported that housing starts increased 3% in October, at a seasonally adjusted annual. But that gain recouped only part of the 11% plunge from August to September, leaving starts 16% below the October 2006 level. Single-family starts fell 7.3% for the month and 25% year-over-year. Multifamily starts, a more volatile number, jumped 44% in October after dropping 33% in October and were up 19% from October 2006. Building permits, a good indicator of near-term future starts, fell 6.6% for the month and 24% from a year ago, with single-family down 8% and 31%, respectively, and multifamily, -3.4% and -4.9%. Yesterday, the National Association of Home Builders reported that homebuilders’ sentiment in October tied September’s reading, the lowest in the survey’s 22-year history.

The Architecture Billings Index (ABI), a monthly survey of 300 architectural firms that measures the number reporting rising vs. falling billings, “showed stronger growth in October, rebounding slightly from a steep downturn in August and September, with a score of 53.2 (where any score above 50 shows growth),” the American Institute of Architects reported on Friday. “Despite the ongoing slowdown in the economy overall, ABI panel members continue to report at least modest billings gains each month. In fact, most panelists feel that the impact of current credit market troubles is no worse in October than it was in September.” Sub-indexes for residential, commercial/industrial, institutional and mixed practices each showed little movement.

Retail construction may be slowing. The Census Bureau reported on Wednesday that advance estimates of seasonally adjusted retail and food services sales rose 0.2% in October and 5.2% from a year earlier. But much of the gain represents higher prices, not higher volumes. The Wall Street Journal reported in separate articles last week that “Starbucks plans to open 1,600 stores in the U.S. next year, 100 fewer than it had projected this fall,” and Home Depot’s “store openings may slow. The company, which is opening about 100 stores this year, cut its planned spending in the current year for new stores by $500 million.” In contrast, Lowe’s said today that it plans to open 72 stores in its fiscal fourth quarter, out of 153 planned for the full fiscal year.

Industrial production (IP) in manufacturing sagged 0.4% in October after rising 0.2% in September, the Federal Reserve reported on Friday. Over the past 12 months, manufacturing output was up 2.1%. “The IP for construction supplies moved down 0.4%, its fourth consecutive monthly decline; nevertheless, the index remained 0.1% above its year-earlier level,” the Fed noted. Capacity utilization in manufacturing slipped to 80.1% of capacity from 80.5% in September and August and 81% in July. The long-term average is 79.8%. Sustained drops in IP and capacity utilization suggest less demand for plant construction to expand capacity.

The producer price index (PPI) for inputs to construction industries and for every industry segment decreased in October and in the past three months combined, the Bureau of Labor Statistics (BLS) reported on Wednesday. However, recent record oil prices have yet to show up in PPI figures for most products. Those prices are likely to affect construction more than most industries. Despite the recent good news, the construction PPI was up 3.9% since October 2006 and 28% since a steel-price spike kicked off the construction cost spiral in December 2003. In contrast, the consumer price index (CPI) for all urban consumers rose 3.5% over the past year, BLS reported on Thursday, and 13.4% since December 2003. Among construction segments, highway and street construction had the highest increases since October 2006 and December 2003: 7.8% and 44%, respectively. Those numbers were driven by huge increases for diesel fuel, 26% and 154%; steel mill products, 4.5% and 56%; asphalt paving mixtures and blocks, 1.6% and 49%; and concrete products, 3.3% and 31.5%. Building costs have risen less rapidly than highway or heavy construction costs over the past year (4% for nonresidential building inputs) and should remain tamer in the next several months. That’s because the homebuilding slump has held down many building materials prices. For instance, the PPI for gypsum products tumbled 4.7% in October, bringing the year-over-year change to -24%; brick and structural clay tile, -0.6% and 0.2%, respectively; insulation materials, -0.1% and -3%; and copper and brass mill shapes, 0.5% and 2.2%.

From September to October, seasonally adjusted construction employment rose in just 17 states, fell in 20 and was flat (or within 100 of the prior level) in 13 plus the District of Columbia, BLS reported today. Since October 2006, construction employment rose in 28 states, fell in 17 and was flat in five plus DC. The biggest one-year percentage gains were in Wyoming, 12%; Utah, 11%; Montana, 9%; Mississippi, 8%; and Tennessee, 6%. The biggest drops were in Alaska and Nevada, -4%; Minnesota, -5%; Arizona, -8%; and Michigan, -9%.

North Texas remains a strong nonresidential construction market. “According to a recent report from CB Richard Ellis, [retail construction in north Texas] nearly doubled in 2007,” the Dallas Business Journal reported on Friday. “Cushman & Wakefield’s statistics show that industrial building in north Texas has almost doubled since last year,” Dallas Morning News columnist Steve Brown wrote on Friday.