Nonfarm payroll employment fell 63,000 in February (seasonally adjusted), resulting in a 12-month increase of only 0.6%, the weakest growth in four years, the Bureau of Labor Statistics recently reported.

Nonfarm payroll employment fell 63,000 in February, seasonally adjusted, resulting in a 12-month increase of only 0.6%, the weakest growth in four years, the Bureau of Labor Statistics (BLS) recently reported. The unemployment rate slipped to 4.8% from 4.9% in January, however.

Construction employment fell for the eighth straight month, by 39,000 to 7,401,000, down 222,000 (2.9%) from February 2007. Residential building and specialty trade contractors shed 238,000 jobs (7.2%) compared to February 2007, while nonresidential building, specialty trade and heavy and civil engineering contractors added 16,000 (0.4%), according to BLS. But as many as 400,000 “residential” specialty trade contractors appear to be doing nonresidential work now, based on the drop in residential employment consistent with the decline in residential spending as reported by the Census Bureau. If these workers are added to nonresidential employment, the gain since February 2007 has been 416,000 jobs (9.6%).

In another positive sign for construction, architectural and engineering services employment climbed 3,500 for the month and 46,000 (3.3%) over 12 months. Average hourly earnings in construction rose 86 cents (4.4%) over the year to $21.45, compared to a 3.7% gain for all private production or nonsupervisory workers. The larger gain in construction reflects a trend toward higher-skilled workers and, perhaps, tightening supplies - another sign that work is not slowing.

Construction spending slumped 1.7% in January to $1.121 trillion at a seasonally adjusted annual rate, and fell 3.3% below the January 2007 mark, the Census Bureau reported. Private residential spending fell 3% and 20%; private nonresidential fell 1.2% for the month but rose 17% compared to January 2007; public spending was off 0.2% and up 6.6%, respectively.

Ten of the 16 nonresidential categories fell for the month, although 14 categories were higher than in January 2007, suggesting the one-month drop was a mix of weather and economic factors. Ranking categories by annual spending, the monthly and year-over-year changes in educational spending were 0.9% and 13%; commercial (retail, warehouse and farm), -0.1% and 0.5%; highway, -1.1% and 1.1%; office, 0.7% and 8.1%; power, -3.6% and 34%; manufacturing, 0.4% and 32%; and health care, -0.8% and 6.3%.

Nonresidential construction starts, the full value of contracts or projects initiated in January and February, slumped 11% compared to the first two months of 2007, Reed Construction Data reported, based on data it gathered. Building construction tumbled 14% and heavy engineering (principally highways, water and sewer) was unchanged.

“Reports from the 12 Federal Reserve districts suggest that economic growth has slowed since the beginning of the year,” the Fed reported in the latest “Beige Book,” a compilation of informal soundings of businesses in each district, which are known by their headquarters city. “Two-thirds of the districts cited softening or weakening in the pace of business activity, while the others referred to subdued, slow, or modest growth … Upward pressure on prices from rising materials and energy prices was noted in almost all the district reports … Residential construction declined or remained at low levels in most districts.

“The markets for office and retail space showed signs of a slowdown in several districts. Office vacancies were reported up, and leasing volumes down, in Manhattan, Baltimore, Washington, D.C., Memphis, portions of Maine and Rhode Island, and Las Vegas. Districts indicated that office vacancies held steady in Boston and the Carolinas, and were down in Philadelphia and in the Minneapolis and St. Louis districts; however, contacts in the Boston and Philadelphia districts and see [sic] some emerging slack.

“Office rents were mixed, however, coming in about flat in greater Boston and Manhattan, either flat or down in the Richmond district, and up in Philadelphia. Retail vacancy was reported up in the Minneapolis district and retail space demand was described as slow in the Chicago district. Demand for industrial space was described as either ‘firm’ or ‘flat’ in the districts commenting on that sector.

“Sales activity in nonresidential markets was down in the Boston, Dallas, Kansas City, and Chicago districts, with contacts citing tight credit conditions as a major factor. Office sales activity remained strong, however, in the major cities of the New York district and in the San Francisco district.

“Eight of the 12 districts reported that nonresidential construction activity was slow; countering these reports, the Cleveland, Dallas, and San Francisco districts indicated that construction remained strong.”

Orders for goods from U.S. manufacturers (excluding semiconductor manufacturing) sank 2.5% in January, seasonally adjusted, following four months of increases, Census reported. Orders for construction materials and supplies slipped 0.6% after falling 2.2% in December, and were 2.2% below the January 2007 level. Orders for construction machinery jumped 15%, the third straight double-digit increase, and were 26% higher than in January 2007, suggesting contractors see more work ahead.

Purchasing executives who responded to the monthly surveys of manufacturing and nonmanufacturing managers conducted by the Institute for Supply Management and released this week listed the following items up in price that are relevant to construction: aluminum; copper; fuel and fuel surcharges; plastic products; and steel, structural steel, and stainless steel products (also listed as down in price).

The Energy Information Administration reported that the national average retail price of highway diesel jumped 10 cents to $3.67 per gallon, $1.03 (40%) higher than a year ago.