The PPI for inputs to construction industries jumped 1.4% for the month, following a 0.9% gain in February, and 3.8% over 12 months.

The producer price index for finished goods rose in March by 0.9%, not seasonally adjusted (but was flat, seasonally adjusted), and 2.8% over 12 months, the Bureau of Labor Statistics reported April 12. The PPI for inputs to construction industries - a weighted average of the cost of all materials used in construction, plus items consumed by contractors such as diesel fuel - jumped 1.4% for the month, following a 0.9% gain in February, and 3.8% over 12 months.

The large monthly gain was driven by the PPIs for diesel fuel, up 3.5% in March and 6.6% over 12 months; gypsum products such as wallboard, which rose 2.2% in March following increases of 5.1% in February and 5.9% in January, bringing the 12-month change to 9.1%; and aluminum mill shapes, up 1.2% in March but down 1.8% year-over-year. Most other key materials had smaller monthly changes: copper and brass mill shapes, up 0.5% in March but down 6% since March 2011; concrete products, up 0.3% and 1.9%, respectively; asphalt paving mixtures and blocks, 0.1% and 11%; plastic construction products, -0.1% and 4.5%; and steel mill products, -0.6% and 0.4%.

PPIs for new nonresidential buildings were close to flat for the month but slightly outran materials costs over 12 months: new warehouses, 0.2% and 4.3%; offices, 0.2% and 3.9%; schools, 0.1% and 4.7%; and industrial buildings, -0.2% and 3.4%. PPIs for nonresidential building subcontractors (covering new, repair and maintenance work) were unchanged in March for plumbing contractors (and up 4.3% over 12 months); roofing contractors (3.9% year-to-year); and concrete contractors (0.9% year-to-year) and down 0.1% for electrical contractors (4.2% year-to-year).

Construction employment increases

Construction employment increased from February 2011 to February 2012 in 171 out of 337 metro areas (including divisions of larger metros) for which BLS provides data, decreased in 119 and stayed level in 47, according to an analysis by the Associated General Contractors of America released April 10. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers.) The number of areas with year-over-year construction employment increases was the largest since January 2007.

Atlantic City-Hammonton, N.J. added the highest percentage (33%, 1,300 combined jobs) followed by Michigan City-La Porte, Ind. (31%, 400 combined jobs). Denver-Aurora-Broomfield, Colo. added the most jobs (6,300 combined jobs, 10%), followed by the Los Angeles-Long Beach-Glendale, Calif. division (4,700 construction jobs, 5%); Portland-Vancouver-Hillsboro, Ore.-Wash. (4,300 construction jobs, 10%); and Indianapolis-Carmel, Ind. (4,100 construction jobs, 12%).

Monroe, Mich. (-32%, -600 combined jobs) lost the highest percentage, followed by Springfield, Mass.-Conn. (-27%, -2,100 combined jobs) and Montgomery, Ala. (-17%, -1,000 combined jobs). The largest number of losses occurred in the Chicago-Joliet-Naperville, Ill. division (-5,400 construction jobs, -5%), followed by St. Louis, Mo.-Ill. (-4,200 combined jobs, -7%); and Tampa-St. Petersburg-Clearwater, Fla. (-4,000 construction jobs, -8%).

New nonresidential construction starts rise

The value of new nonresidential construction starts in March rose 1.4%, not seasonally adjusted, from a year earlier, Reed Construction Data reported April 12, based on data it compiled. For the first quarter of 2012 as a whole compared with January-March 2011, starts climbed 3.7%, with commercial starts soaring 39% and institutional starts rising 13%, offsetting a drop of 18% in heavy engineering starts and 48% in industrial starts.

“Reports from the 12 Federal Reserve districts indicated that the economy continued to expand at a modest to moderate pace from mid-February through late March,” the Fed reported April 11 in the latest “Beige Book,” a compilation of informal surveys of firms in each district (referenced by the name of its headquarters city). “The Philadelphia and Dallas districts indicated improvement in demand for manufacturing with ties to … housing and construction … The St. Louis and Minneapolis districts reported increases in building permits. The construction of multifamily housing units, including apartments and senior housing, expanded in many districts….

“Nonresidential construction activity improved in the Philadelphia, Cleveland, Richmond, Atlanta, Chicago and St. Louis districts, though many of these contacts characterized the improvement as slow. Boston, New York and San Francisco characterized nonresidential real estate activity as unchanged or steady. The energy and high-tech sectors were driving much of the demand in the Dallas district. San Francisco noted a rise in the demand for office space from the technology sector. Cleveland and Chicago saw a boost in health-care-related construction.

“Projects related to the education sector are showing growth in Boston, Cleveland, Philadelphia and Richmond. The outlook of builders is described as positive or slowly improving in the Philadelphia, Cleveland, Atlanta and Kansas City districts and as cautiously optimistic in Boston … several districts reported an increase in commercial real estate lending activity. The Philadelphia and Cleveland districts reported increased lending for multifamily housing and health care.”

Click here to view March PPI numbers and here to view February metro employment numbers. Click here to view updated state economic fact sheets.