Construction employment increased in 31 metro areas from July 2009 to July 2010 (not seasonally adjusted), was unchanged in 30, and declined in 276, AGC reported today, based on Bureau of Labor Statistics (BLS) data. (For most areas, BLS combines construction with mining and logging to prevent disclosure of data for industries with few employers.) Slightly more metros showed gains (31 vs. 25) or no change (30 vs. 27) than in the June 2009-June 2010 period. The largest percentage gains were in the Eau Claire, Wisconsin metro (16%, 500 combined jobs) and the Haverhill-North Andover-Amesbury, Massachusetts-New Hampshire division (13%, 500 combined jobs) of the Boston-Cambridge-Quincy New England City and Town Area. The largest number of combined jobs were added in the Calvert-Charles-Prince Georges, Maryland portion (8%, 2,800 jobs) of the Washington-Arlington-Alexandria, District of Columbia-Virginia-Md.-West Virginia metro and the Kansas City, Kansas portion (9%, 1,700 combined jobs) of the Kansas City metro area. The Chicago-Joliet-Naperville division lost more construction jobs (32,900 jobs, 23%) than any other metro area, reflecting a construction strike that has since ended. Flagstaff, Arizona lost the highest percentage (32%, 700 combined jobs), followed by Napa, California (31%, 1,000 combined jobs). Other areas experiencing large declines in the number of construction jobs included Las Vegas (14,800 jobs, 24%) and Houston-Sugar Land-Baytown (14,700 jobs, 8%).
The value of new construction starts in July increased 7% from June at a seasonally adjusted annual rate, McGraw-Hill Construction (MHC) reported on August 20, based on data it compiled. "Nonresidential building continued to see improvement after extremely depressed activity earlier in the year, and nonbuilding construction bounced back following its June slide," MHC said. "Both sectors in July were lifted by the start of several massive projects. Meanwhile, residential building lost momentum in July, as the housing recovery paused for an additional month. For the January-July period of 2010, total construction starts on an unadjusted basis [were] down 4% compared to a year ago." Of MHC's three categories, nonresidential building construction rose 3% for the month but was down 14% year-to-date; residential building, fell 3% and rose 15%, respectively; and nonbuilding construction, climbed 25% and dropped 7%.
The number of mass layoff actions (involving 50 or more employees) in July fell 30% to 2,124 from 3,054 in July 2009, not seasonally adjusted, and resulted in the separation of 206,000 workers, down 39%, BLS reported on August 20. There were 135 mass layoffs in construction (down 21%), involving 9,570 workers (down 23%).
"Commercial real estate markets showed surprising resiliency during the second quarter, with property transactions rising solidly and leasing activity holding up better than expected," Wells Fargo Economics Group commented today. "We remain cautious in our outlook for commercial real estate and construction....The apparent improvement in demand may be overstated as many firms are taking advantage of soft market conditions to upgrade space and locations."
"The combination of 600,000 new private sector jobs in the first half of 2010 and the fourth consecutive quarter of positive [growth in inflation-adjusted gross domestic product] created positive occupancy increases" in industrial, apartment, retail and hotel properties, Glenn Mueller, producer of the Dividend Capital Real Estate Market Cycle Monitor (www.dividendcapital.com) reported on Friday. "Even though these improvements were small, they were enough for us to call the bottom of the occupancy cycle and forecast the recovery going forward. Office occupancies were flat in 2Q10 {the second quarter] and rents declined by 0.5% for the quarter, resulting in a 4.5% annual decline. Industrial occupancies improved 0.1% in 2Q10 and rental growth fell 0.8% for the quarter and 6.8% annually. Apartment occupancy improved 0.2% in 2Q10 and rental growth improved 0.1% for the quarter, but fell 2.5% annually. Retail occupancy improved 0.2% in 2Q10 and rental growth fell 0.1% for the quarter and 5.5% annually. Hotel occupancies improved 1.1% in 2Q10, and [revenue per available room] improved 13% for the quarter and improved 6.2% annually."
"State tax revenues across the country are starting to rebound, with April-June of this year bringing a second consecutive quarter of growth," the Rockefeller Institute of Government (www.rockinst.org) reported today. "Gains in collections were widespread during the second quarter, with 30 states showing increases in revenues compared to a year earlier, based on preliminary data the Rockefeller Institute obtained from state officials. Figures from 47 early-reporting states show collections from major tax sources rose by 2.2% from the second quarter of 2009. Despite the year-over-year gains, revenues were still significantly below pre-recession levels. Preliminary figures show overall collections for the second quarter roughly 17% below the same period two years ago....Gains in the April-June period followed an average 2.5 percent increase in state tax collections during the first quarter of 2010. Each of the five preceding quarters, October-December 2008 through all of 2009, saw significant declines in revenues." Until those decreases are reversed, many states are likely to hold down construction funding.
The Congressional Budget Office (CBO) recently updated its projections of the federal budget, including the Highway Trust Fund. CBO estimates that both the Highway and Transit accounts of the Trust Fund will be able to meet all obligations through sometime during fiscal year 2013 and estimates that at the end of fiscal 2010 (September 30), the Highway account will have a balance of $23 billion and the Transit account will have a balance of $8.4 billion.
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