Several commodities used in construction continue to rise rapidly in price, including diesel fuel, natural gas, copper and steel.

The consumer price index (CPI) for all urban consumers in February was unchanged after seasonal adjustment from January’s level but 4% higher than in February 2007, the Bureau of Labor Statistics (BLS) reported. The CPI for urban wage earners and clerical workers (CPI-W), which is used to adjust many union contracts in construction and other industries, was up 4.4% from February 2007.

Several commodities used in construction continue to rise rapidly in price, including diesel fuel, used for powering offroad equipment, construction vehicles, and mining, manufacturing and transport of many materials; natural gas, which is the feedstock for polyvinyl chloride (PVC) and other construction plastics; copper; and steel. The national average retail price of on-highway diesel fuel jumped another 16 cents per gallon this week to a record of $3.82, up 42% from a year ago, the Energy Information Administration reported on Monday. The agency predicted in its March “Short-Term Energy Outlook,” issued on Tuesday, “Diesel fuel prices, which averaged $2.88 per gallon last year, are projected to average $3.45 and $3.22 per gallon, respectively, in 2008 and 2009….The Henry Hub spot price [for natural gas] averaged $8.76 per mcf [thousand cubic feet] in February, $0.51 per mcf more than the average January spot price.  Cold weather so far in the first quarter has kept pressure on prices, which are expected to decline as space heating demand begins to wane in April.  On an annual basis, the Henry Hub spot price is expected to average about $8.18 per mcf in 2008 and $7.95 per mcf in 2009.”

Copper futures on the New York Mercantile Exchange closed today at $3.82 per pound, up 32%  from a year ago. The Institute of Scrap Recycling Industries reported yesterday, “as widely reported, domestic producers [of hot-rolled coil steel, used to make numerous construction products] have announced higher [price] tags for April and May deliveries…AK Steel, for example, is looking at $800” per ton free on board (f.o.b.), a record, for May deliveries.

“U.S. employers anticipate a decline in hiring” in the second quarter, Manpower Inc. reported on Tuesday, based on its quarterly survey of 14,000 private and public employers. “The seasonally adjusted survey results show the weakest employment outlook since Quarter 1 2004, as hiring activity is expected to remain stable or decrease in all industry sectors but one….Transportation/Public Utilities is the lone sector to indicate an increase in hiring for the upcoming quarter, and that increase is expected to be slight….In the construction sector, employers project a moderate decrease in hiring…and the least optimistic hiring projections of the 10 industry sectors surveyed. According to seasonally adjusted survey results, employers anticipate a considerably steeper decline compared to Quarter 2 2007. For Quarter 2 2008, hiring plans are most promising in the Northeast, while employers in the West expect to take a far more cautious approach to hiring than those in the other three regions, with job cuts more likely than job gains.”

In another sign of the worsening job market for construction, BLS reported on Wednesday in its January job openings and labor turnover release that from January 2007 to January 2008, the rate of construction job openings fell 1.4%, the rate of hires was unchanged, and the rate of layoffs and discharges was highest of all 10 sectors.

“Between December 2007 and January 2008, employment increased in 30 states, decreased in 18 states and the District of Columbia, and remained unchanged in” Kansas and Wyoming, BLS reported on Tuesday. “Over the year, nonfarm employment increased in 44 states and the District of Columbia and decreased in 6 states.” The largest over-the-year percentage increases in employment occurred in Wyoming, 3%; Texas and Utah, 2.7% each; Louisiana, 2.4%; and  Washington, 2.3%. Rhode Island experienced the largest over-the-year percentage decrease in employment, -1.5%; followed by Michigan, -1.3%; Wisconsin, -0.2%; and Florida, Ohio, and West Virginia, -0.1% each.

Construction employment increased from December to January in 15 states, decreased in 27 plus DC, and was unchanged (or within 100 of prior levels) in eight. From January 2007 to January 2008, construction employment rose in 21 states, fell in 28 and was within 100 jobs of the prior level in DC and Missouri. The largest percentage increases were in Wyoming, 8%; Hawaii and Nebraska, 6% each; Texas, 5%; Oklahoma and Utah, 4% each. The largest percentage drops were in Florida, -11%; Arizona and Rhode Island, -10% each; California and West Virginia, -8% each.

Total revenue of architectural and related services firms in the fourth quarter of 2007 rose 4.7% from the third quarter and 13.5% from the fourth quarter of 2007, the Census Bureau reported on Wednesday in its quarterly release on revenue for selected services. Third-quarter revenues had risen 1.8% and 9.4% from the prior and year-ago quarters. Revenue of engineering services firms rose 2.7% and 11.4% in the fourth quarter, 5% and 11.8% in the third. These services are a rough guide to future demand for construction, especially nonresidential, and appear to suggest little if any slowdown. But the numbers are not adjusted for seasonal variation, and engineering in particular may include a lot of foreign demand, which can vary from changes in U.S. construction demand.

On March 7, BLS reported that architectural services employment in January 2008 was up 2.5% from January 2007, the slowest year-over-year growth since May 2004. Engineering and drafting services employment was up 3.5%, similar to the growth rates of the prior six months.

Retail and food services sales in February declined 0.6% after rising 0.4% in January, Census reported on Thursday. Sales for the past three months combined fell 0.1% from the prior quarter, a bad omen for retail construction.