President signs health care, 'jobs' bills

President Obama today signed the Patient Protection and Affordable Care Act, the health care bill passed by the Senate on Christmas Eve and by the House late on Sunday night. The impact on construction will depend in part on whether a package of changes to the Senate bill that the House passed separately on Sunday becomes law. The Senate is debating those changes now. The Act generally exempts employers with fewer than 50 employees from some coverage mandates or penalties; however, a provision introduced by Sen. Jeff Merkley (D-Oregon) sets the threshold at fewer than five employees for construction employers. The pending bill would restore construction to parity with other industries. The President on Thursday signed the Hiring Incentives to Restore Employment (HIRE) Act, or "jobs bill," which included several provisions important to construction. The law extends highway and transit program authorizations through December 31 at current funding levels and restores states' ability to spend money that had been rescinded; provides additional revenue to the Highway Trust Fund, provides $4.6 billion in additional authority for Build America Bonds, which have been used extensively by state and local governments to fund infrastructure projects; and extends expensing thresholds so that taxpayers buying relatively small amounts of equipment can write off up to $250,000 in 2010 in lieu of depreciating those costs over time. As a result of the Highway Trust Fund changes, the Congressional Budget Office estimated that "both the Highway Account and the Transit Account of the Trust Fund will be able to meet all obligations in a timely manner through the end of Fiscal Year 2012. CBO estimates that both accounts will not be able to meet obligations in a timely manner in Fiscal Year 2013." The producer price index (PPI) for finished goods dropped 0.6% in February but rose 4.4% compared to a year earlier, the Bureau of Labor Statistics (BLS) reported on Wednesday. The PPI for inputs to construction industries, a weighted average of materials used in every type of project plus items consumed by contractors (such as diesel fuel), rose 0.1% and 2.8%. BLS updated the weights (available from AGC) and combined the weights for single- and multi-unit residential construction. The PPI for those inputs rose 0.3% and 1.3%. PPIs for nonresidential construction fell 0.4% for the month but rose compared to February 2009: highway and street construction, 6.2%; other heavy construction, 2.7%; and nonresidential buildings, 2.3%. In contrast to the rising prices paid by contractors, the prices received for completed buildings fell more over the past 12 months than previously: new warehouse construction, -0.1% for the month and -5.7% over 12 months; industrial buildings, 0 and -4.6%; offices, 0.1% and -4.6%; and schools, -0.2% and -1.8%. Prices received by subcontractors for nonresidential building work (new and repair) varied: electrical subcontractors, 0 and -3.3%; roofing, -0.1% and -2.1%; roofing, 0.1% and -1.1%; and plumbing, 0.2% and 0.7%. PPIs for materials that rose in February included steel mill products, 4.6% and 5.0%; lumber and plywood, 4.5% and 9.2%; insulation materials, 2.5% and 1.0%, asphalt paving mixtures and blocks, 2.1% and 0.1%; plastic construction products, 1.5% and 1.3%; aluminum mill shapes, 1.3% and 11%; and concrete products, 0.4% and 1.3%.. PPIs fell in February but remained far higher than a year earlier for diesel fuel, -9.5% and 40%; and copper and brass mill shapes, -4.7% and 53%. "Unemployment rates were higher in January than a year earlier in 363 out of 372 metropolitan areas, lower in seven and unchanged in two," BLS reported on Friday. "Among the 371 metropolitan areas for which nonfarm payroll data were available, 346 reported over-the-year decreases in employment, 24 reported increases and one remained unchanged." Construction employment (combined by BLS with logging and mining for most metros to prevent disclosure about industries with few employers) fell compared to January 2009 in 314 areas, was unchanged in 14 and climbed in nine. Of the nine, only two had gains of more than 100 workers: Eau Claire, Wisconsin, 500 combined jobs or 23%, and Syracuse, New York, 400 combined jobs or 4%. The largest percentage declines were in Steubenville, Ohio-Weirton, West Virginia, -44% or 1,600 combined jobs; Grand Junction, Colorado, -34% or 3,400 combined jobs; Las Vegas-Paradise, Nevada, -32% or 24,500 jobs (construction only) and Napa, California, -32% or 1,100 combined jobs. Contradictory reports emerged last week regarding nonresidential construction starts. McGraw-Hill Construction said on Friday that the value of nonresidential starts for the first two months of 2010 totaled $40.0 billion, down 8% from the same months of 2009, with nonresidential building starts falling 17% to $21.1 billion and nonbuilding starts rising 4% to $18.8 billion. Reed Construction Data reported on March 15 that the two-month total climbed 12% to $43.8 billion, with building starts up 4% to $26.8 billion and heavy engineering starts jumping 28% to $17.0 billion. The consumer price index (CPI) for all urban consumers was unchanged in February and up 2.1% from a year earlier, BLS announced on Thursday. The CPI for urban wage earners and clerical workers (CPI-W), used to adjust pay in many construction and other contracts, rose 2.8% from a year before.