"Economic activity has continued to increase, on balance," since late May, the Federal Reserve reported on Wednesday in the "Beige Book," a compilation of informal soundings of business conditions by the 12 regional Fed banks. Regions are referred to by the banks' headquarters cities. "Commercial real estate markets, especially construction, remained weak....Richmond, Chicago, and Dallas reported that firms in construction-related manufacturing experienced weak demand; construction supplies sales were flat in Kansas City, and Minneapolis reported that a firm in the sector was increasing production....Construction remained limited in several Districts. In the Atlanta District, residential construction activity softened from already weak levels. Homebuilders in the Cleveland District do not expect a turnaround in new home construction any time this year. Builders in the Chicago District are not introducing new inventory without a signed contract on a home. Housing starts were expected to decline for the second half of the year in the Dallas District and to increase slightly over the next three months in the Kansas City District. Commercial and industrial real estate markets continued to struggle in all twelve Districts. Overall, vacancy rates were flat to slightly increased and continued to exert downward pressure on rents. Construction activity remained weak in most Districts. The New York District noted that commercial development remained generally sluggish despite some pickup in office and retail leasing in New York City. Atlanta, Minneapolis, and Dallas reported that construction activity continued to be weak or to decline, and Cleveland reported that the increase in construction from previous reports has begun to diminish. Philadelphia reported that projects funded with federal stimulus support were near completion with no prospects for additional major construction, while Chicago reported that public infrastructure construction picked up. Developers reported difficult credit conditions in the Cleveland, Richmond, St. Louis, and Kansas City Districts, while the Dallas District reported a few developers going out of business. The outlook for commercial and industrial real estate across the Districts ranged from further declines in activity to slow growth."
Unemployment rates were lower in June than a year earlier in 185 of the 372 metropolitan areas, higher in 168 areas, and unchanged in 19 areas, the Bureau of Labor Statistics (BLS) reported on Wednesday. Nonfarm payroll employment increased from June 2009 in 135 areas, decreased in 226 and remained level in 11. Construction employment declined in 285 out of 337 areas (including submarkets) for which data is available from BLS, increased in 25 and held steady in 27, according to an analysis by AGC. (BLS combines mining and logging with construction in most areas to prevent disclosure of data about industries with few employers.) The number of locations with increases was the largest since the recession began, and both the total number with decreases and with double-digit percentage decreases (106) were the smallest. Calvert-Charles-Prince George's Counties in Maryland added the most (1,900 combined jobs, 5%) while Hanford-Corcoran, California added the highest percentage (22%, 200 combined jobs). Other areas adding jobs included Kansas City, Kansas (1,600 combined jobs, 8%); Columbus, Ohio (1,200 combined jobs, 4%); Chattanooga, Tennessee (900 combined jobs, 11%); and Eau Claire, Wisconsin (400 combined jobs, 13%). Chicago-Joliet-Naperville lost more construction jobs (21,300, 15%) than any other area, while Pascagoula, Mississippi (2,000 combined jobs, 32%) and Flagstaff, Arizona 700 jobs, combined 32%) lost the highest percentage. Other large declines in construction employment occurred in Las Vegas (16,500 jobs, 26%); Houston (16,300 jobs, 9%); Los Angeles-Long Beach-Glendale (15,900 jobs, 13%); and Seattle-Bellevue-Everett (12,400 jobs, 16%).
Real (net of inflation) gross domestic product (GDP)-the value of all goods and services produced by labor and property located in the United States-increased at a seasonally adjusted annual rate of 2.4% in the second quarter of 2010, according to today's "advance" estimate by the Bureau of Economic Analysis, down from 3.7% growth in the first quarter. Real investment in private nonresidential structures (including wells and mineshafts) increased 5.2%, in contrast to a decrease of 17.8%. Real residential fixed investment increased 27.9%, in contrast to a decrease of 12.3%. Real government investment in structures increased by 11.2%, compared with a decrease of 14.5%. The price index increased 1.8% for GDP, 2.7% for private nonresidential structures and 1.6% for government structures but fell 3.6% for residential.
Compensation costs (wages plus benefits) increased 0.5%, seasonally adjusted, in the second quarter for all civilian workers and only 0.2% for construction industry workers, BLS reported today. Increases for the 12-month period ending June 2010 totaled 1.8% for all workers and 1.0% for construction, the lowest of any industry "supersector."
The prolonged duration and high rates of unemployment in the country are depleting state unemployment insurance (UI) trust funds. Many states are expected to raise their UI wage bases and/or tax rates. "The average employer's [UI] tax is projected to go from 2.39% this year to 3.36% in 2011" in Washington state, the AGC of Washington reported on Tuesday. "Combined with an increase in the taxable wage base, it means that employers will see around a 42% increase in [UI] costs. Individual employers will see different increases depending on their experience rating. Construction firms are historically hit harder than other employers, as [the] seasonal nature of construction means that industry generally has higher ratings due to more layoffs."
- Industry Priorities
- Education
- News
- Connect
- Benefits
- Events
- Shop