Construction job and spending cuts remain deep and wide, with credit scarce

Nonfarm payroll employment "was essentially unchanged (-20,000)" in January, seasonally adjusted, the Bureau of Labor Statistics (BLS) reported today, far less than the average (-335,000) over the past 12 months. The unemployment rate fell from 10.0% in December to 9.7% (10.6%, not seasonally adjusted). However, construction employment sank by 75,000, nearly the same as the 77,000 average over the past 12 months. The construction unemployment rate rose to 24.7%, not seasonally adjusted. Over the past 12 months, construction accounted for nearly one-quarter of all job losses (926,000 out of 4.0 million, or 23%), even though the industry now employs only 4.3% of all workers (5,625,000 out of 129.5 million), the lowest total since 1996 and lowest share of overall employment since 1992. In an ominous sign for future building construction, architectural services employment (not seasonally adjusted) fell for the 17^th straight month in December (-1,300 jobs or 0.8%) and dropped 14.6% from December 2008. In contrast, engineering and drafting services employment (not seasonally adjusted) was nearly unchanged in December (- 200 or 0.0%) and 5.7% from December 2008. Construction employment (combined with logging and mining in many metros to prevent disclosure of data about industries with few employees) rose in only four out of 337 metro areas from December 2008 to December 2009, BLS reported on Monday: Harrisburg-Carlisle, Pennsylvania (1,500 combined jobs, 13%); Springfield, Ohio (100 combined, 8%); Columbus, Indiana (100 combined, 5%); and Tulsa, Oklahoma (700 construction jobs, 3%). Employment was unchanged in eight metros and down in 325. The largest 12-month percentage drops were in Leominster-Fitchburg, Massachusetts (38% combined); El Centro, California (36% combined); and Santa Fe, New Mexico; Pocatello, Idaho; and Kokomo, Ind. (all 29% combined). Construction spending slumped 1.2% in December from an upwardly revised November total to a seasonally adjusted annual rate (SAAR) of $903 billion, a six-year low and 9.9% lower than in December 2008, the Census Bureau reported on Monday. Private nonresidential spending edged up 0.2% for the month but tumbled 18% compared to December 2008, with double-digit declines in nearly every category. Only power construction-power plants, wind and other renewable power facilities, and transmission lines-increased from the year-ago level, by 14%. Developer-financed categories notched especially large declines: lodging, -46%; commercial (retail, warehouse and farm), -37%; and office, -35%. Public construction slid 1.3% from November but eked out a 1.0% increase over December 2008. Highway and street construction, aided by stimulus spending, rose 3.7% to become the largest public category, while educational construction dropped into second place with a 4.0% decline. Private residential construction shrank 2.8% for the month and 11% from year-earlier figures. But the total masks a seventh consecutive monthly rise in new single-family construction, which was up 0.6% for the month. Compared to December 2008, the category was down 18%, a much smaller year-to-year drop than in earlier months. Meanwhile, new multi-family construction fell for the 11th straight month, by 4.4%, and by 45% compared to December 2008. Improvements to existing single- and multi-family structures plunged 5.5% for the month but rose 8.2% over the year-ago level. Real (net of inflation) gross domestic product (GDP) climbed 5.7% (SAAR) in the fourth quarter, following a 2.2% rise in the third quarter, the Bureau of Economic Analysis reported on January 29. Real investment in private nonresidential structures fell 15%, the sixth straight quarterly decline and only a slight improvement over the 18% decrease in the third quarter. Real private residential investment increased 5.7%, following a 19% gain in the third quarter. Real government investment in structures slipped 5.0%, following an 8.6% rise. The GDP price index rose 0.6% (SAAR), after inching up 0.4% in the third quarter. The price index for private residential structures fell for the fourth quarter in a row, by 2.2%, following 10% declines in the second and third quarters. The price index for residential investment increased 2.2%, after a 2.7% drop in the third quarter. These disparate trends suggest nonresidential contractors are still delivering projects at lower prices even though the prices of goods and services are rising slightly. New orders for U.S. manufactured goods (excluding semiconductor manufacturing) increased 1.0 %, seasonally adjusted, in both December and November, Census reported on Thursday. For all of 2009, orders totaled $4.25 trillion, a drop of 18% from 2008. Orders for construction materials and supplies fell 1.5% in December and totaled $453 billion for the year, down 13% from 2008. Orders for construction machinery jumped 17% in December but ended the year down 57% from 2008 at $13 billion. The Federal Reserve released its latest quarterly survey of senior loan officers at 55 large U.S. banks and 23 subsidiaries or branches of foreign banks on Monday. "For many major loan categories covered by the survey, the net percentages of respondents that tightened standards in the fourth quarter of 2009 were close to zero. However, banks continued to tighten a number of terms on loans to both businesses and households, although the net fractions of banks that reported doing so in the January survey generally stepped down again. Banks' policies on commercial real estate lending were an exception, as large net fractions of respondents further tightened their credit standards during the final quarter of last year. In addition, banks reported that they had tightened terms on CRE loans substantially over the past year."