State employment shrinks overall and for construction; credit stays tight; retail is weak

Unemployment rates rose and nonfarm payroll employment in February fell in the District of Columbia and all states except Louisiana, the Bureau of Labor Statistics (BLS) reported today. Compared to a year earlier, every state had higher unemployment rates and all had lower employment except Wyoming, +1.6%; D.C., +1.4%; Alaska, +0.9%; La., +0.3%; and North Dakota, +0.2%.  The largest 12-month percentage declines in employment were in Arizona, -6.7%; Michigan, -6.5%; Nevada, -5.2%; and Florida, -5.1%. Construction employment fell in February in 41 states, increased in six and was unchanged (or within 100 of the January level) in three plus D.C. Compared to a year earlier, construction employment fell in 45 states plus D.C., rose in La. (8.2%), Oklahoma (1.2%) and Arkansas (0.5%), and was within 100 of the prior level in Alaska and N.D. The largest 12-month percentage losses were in Arizona, -27%; Vermont, -22%; Florida, -21%; Connecticut and California, -19% each.

"Architecture firms report that the availability of credit for construction projects remains a serious problem," the American Institute of Architects reported in its March 20 Work on the Boards survey. "In comparison to last fall when project financing emerged as a serious issue, [48%] report that construction financing has gotten much more restrictive in the interim, while an additional 34% report that it has gotten somewhat more restrictive. In fact, many firms put credit market restrictions on par with the serious economic recession as the principal cause of weakening business conditions at firms. When asked to compare these two factors in terms of their impact on business conditions in the construction sector, 21% selected credit problems for otherwise viable projects as the more serious of the two, while 34% put a weak economy at the top of the list. Over a quarter of firms (28%) rated these problems as a toss-up, while the remaining 18% indicated that it is very difficult to separate credit restrictions from the economic downturn in terms of assessing problems with projects proceeding forward." The Wall Street Journal reported on Thursday, "Commercial real-estate loans are going sour at an accelerating pace...The delinquency rate on about $700 billion in securitized loans backed by office buildings, hotels, stores and other investment property has more than doubled since September to 1.8% this month, according to data provided...by Deutsche Bank AG." The outlook for retail construction remains glum as consumers continue to curb spending. The Bureau of Economic Analysis reported today that real (inflation-adjusted) personal consumption expenditures decreased 0.2% in February, seasonally adjusted, following a gain of 0.7% in January. On March 12, the Census Bureau reported that retail sales slipped 0.1% in February, seasonally adjusted. "Real-estate developers are expected this year to complete more than 78 million square feet of new retail space in the top 54 U.S. markets, according to real-estate-research company Property & Portfolio Research Inc.," the Journal reported on Wednesday. "While that is down from the 144 million square feet completed last year-the peak number this decade-the amount expected this year probably is more than the market can absorb in its second year of a recession....In Dallas, Harvest Partners...postponed construction of Park Lane's Valencia hotel tower. [Near] Giants Stadium in New Jersey's Meadowlandws...developers last week postponed Xanadu's opening from this August....In Atlanta, developer Ben Carter Properties Inc. recently pushed back the debut of the $650 million first phase of its Streets of Buckhead luxury mixed-use project to fall 2010 from this November to negotiate lower construction prices and to allow retailers more time....In Chicago, developer Joseph Feed and Associates has delayed completion of the first phase of its Block 37 mixed-use projects, spanning 285,000 square feet of shops, to this fall from this spring." Bucking the trend, the Journal reported on Thursday, "Spanish retailer Inditex SA [which operates Zara and six other chains] expects to open 370 to 450 new locations in 2009" worldwide. On March 16, the Journal  reported, "Tractor Supply Co. boosted its long-term growth target, saying the continental U.S. can support as amany as 1,800 stores, up from a previous estimate of 1,400 stores....The 855-store chain selling farm and ranch supplies continue to expect to add 70 to 80 stores in 2009." Base realignment (BRAC) construction remains strong. The Fort Bragg, North Carolina, "BRAC Regional Task Force announced...several construction-related openings with job descriptions," CarolinaNewswire.com reported on March 20. "'Over the next three years nearly 2,000 construction workers will be needed to build the more than 700,000 square-foot combined headquarters building,' said Paul Dordal, executive director of the BRAC Regional Task Force." On March 17, Census released the first, preliminary results of the 2007 Economic Censuses, which are conducted every five years. The number of construction establishments (fixed locations, usually one per firm) totaled 725,000 in 2007, up 2% from 2002. Revenue climbed 47% to $1.78 trillion. The number of paid employees for the pay period ending March 12 rose 2.9% to 7,399,000. Annual payroll rose 37% to $348 billion. The only segment with growth in establishments or employees was specialty trade contractors, with 476,000 establishments (up 6% from 2002), revenues of $792 billion (+63%), and 4,977,000 paid employees (+14%). There were 209,000 building construction establishments (-1%), with revenue of $702 billion (+33%) and 1,408,000 paid employees (-16%). There were 40,000 heavy and civil engineering construction establishments (-20%), with revenues of $288 billion (+45%) and 1,014,000 employees (-11%).