The producer price index (PPI) for finished goods in February slipped 0.1% before seasonal adjustment (but rose 0.1%, seasonally adjusted) and 1.3% over 12 months, the Bureau of Labor Statistics (BLS) reported on Tuesday. The PPI for inputs to construction industries dropped 0.6% for the month and edged up 0.5% over 12 months. Materials prices fell for the most part-steeply in some cases. The PPI for diesel fuel plunged 11% and 49%; steel mill products, -6.1% and -9.8%; aluminum mill shapes, -4.2% and -16%; copper and brass mill shapes, -1.8% and -34%; lumber and plywood, -0.8% and -7.1%. Items that partly reversed previous run-ups include asphalt paving mixtures and blocks, down 1.1% for the month but still 20% higher than in February 2008; gypsum products, -1.1% and 7.8%; concrete products, -0.1% and 4.8%; and plastic construction products, -0.1% and 3.4%. PPIs for inputs to construction types all fell for the month but varied over the 12-month span: highway and street construction inputs, -0.5% and -2.5%; other heavy construction, -1.5% and -2.4%; nonresidential buildings, -0.7% and -0.1%; multi-unit residential, -0.6% and 1.1%; and single-unit, -0.3% and 3.1%.
The consumer price index (CPI) for all urban consumers in February climbed 0.5% before adjustment (0.4%, seasonally adjusted) but only 0.2% over 12 months, BLS reported today. The CPI for urban wage earners and clerical workers (CPI-W), used to adjust many labor contracts in construction and other industries, fell 0.3% over 12 months.
The American Institute of Architects announced today that its Architecture Billings Index (ABI), which measures the difference between architecture firms that reporting rising or falling billings in the last month, rose slightly in February to 35 from an all-time low of 33 in January, but still far below a breakeven level of 50. Firms with institutional and mixed practices set new lows of 37 and 40, respectively; commercial/industrial practices held at 32; residential rose a point to 33.
The value of new construction starts in February slumped 8% at a seasonally adjusted annual rate (SAAR), McGraw-Hill Construction (MHC) reported on Monday, based on its own data compilation. Nonresidential building and nonbuilding construction each tumbled 13%. Residential building increased 9%, with single-family up 7% and multifamily up 16% "after a depressed January." For the first two months of 2009 combined, starts were down 45% from the same months of last year, although last year's numbers were swelled by "five exceptionally large projects" totaling $12 billion. MHC, like Reed Construction Data, counts the full value of new projects in the month they start, which can make monthly or year-over-year comparisons tricky. In contrast, the Census Bureau reports "spending put in place"-an estimate of spending in a given month on projects underway. Even aside from these huge projects, MHC said "nonresidential building for the first two months of 2009 would be down 35% from a year ago, while total construction would be down 37%." The total was dragged down by residential building, -55% year-to-date, and nonbuilding construction, -13%.
Consistent with MHC's residential figures, Census reported on Tuesday that the number of housing units started in February rose 22% (SAAR), with single-family up 1% and multifamily up 82% after several very weak months. Compared to a year ago, single-family starts fell 51% and multifamily, -41%. Building permits, a reliable predictor of near-term starts, rose 3% overall (SAAR) for the month, with single-family permits up 11% but multifamily down 11%. Compared to a year ago, the number of permits shriveled 44%: -42% for single-family, -48% for multifamily.
Industrial production (IP) at mines, utilities and factories fell for the fourth straight month in February, by 1.4%, seasonally adjusted, the Federal Reserve reported on Monday. "Production in the manufacturing sector moved down 0.7%, with broad-based declines among its components," including a 2.2% drop in output of construction supplies. Compared to a year ago, manufacturing IP was down 13%, with output of construction supplies down 18%. Capacity utilization in manufacturing sank to 67.4% of capacity, an all-time low in a series that began in 1948. Together, current output and capacity utilization can indicate future demand for factory construction.
In January, seasonally adjusted nonfarm payroll employment decreased in 42 states, increased in seven states and the District of Columbia, and was unchanged in Vermont, BLS reported on March 11. Compared to January 2008, employment fell in 44 states and rose in six plus D.C. The largest 12-month percentage decreases were in Arizona and Michigan, -6.2% each; Nevada, -5.1%; Florida, -4.5%; and Ohio, -4.0%. The largest increases were in Wyoming, 2.4%; D.C., 1.7%; Alaska, 0.9%; North Dakota, 0.8%; and Oklahoma, 0.4%. Construction employment fell in January in 36 states, was unchanged (or within 100 of prior levels) in 10 plus D.C., and rose only in Michigan, Indiana, Louisiana and Mississippi. Over 12 months, construction employment fell everywhere except Louisiana, +6,800 or 5%; Oklahoma, 2,200 or 3%; North Dakota, 600 or 3%; and Arkansas, 200 or 0.4%. The largest 12-month percentage losses in construction were in Arizona, -24%; Vermont, -20%; Nevada and Florida, -18% each; and Connecticut, -17%. Nationally, construction employment shrank 10% from January 2008 to January 2009.
Total revenue of architectural and related services firms fell 3.9% in the fourth quarter of 2008, not seasonally adjusted, after rising 1.8% in the third quarter, Census reported on Friday. Revenue of engineering services firms rose 3.2% and 3.4%, respectively. The slowdown is a harbinger of future demand for construction.
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