Construction jobs, earnings increase in more states; MHC, Reed, ABI point differently

Seasonally adjusted construction employment rose in August in 25 states and the District of Columbia, dropped in 23 states and remained level in Iowa and Texas, AGC reported on Tuesday, based on new Bureau of Labor Statistics data. Compared with August 2009, construction employment rose in nine states plus D.C., the largest number of locations with a year-to-year gain since October 2008. Construction employment decreased over the 12-month span in 41 states. The largest 12-month percentage increases were in New Hampshire, 10%, 700 jobs; Oklahoma, 9%, 6,300 jobs; Kansas, 8%, 4,600 jobs; and D.C., 4%, 400 jobs. The worst percentage declines were in Nevada, 20%, 14,700 jobs; Vermont, 14%, 1,900 jobs; Idaho, 13%, 4,300 jobs; Colorado, 12%, 15,300 jobs; and Washington, 11%, 17,600 jobs. (Logging and mining are combined with construction data for D.C. and six states to prevent disclosure about industries with few employers.) State personal income growth averaged 1.0%, seasonally adjusted, in the second quarter, up slightly from 0.9% in the first quarter, the Bureau of Economic Analysis reported on Monday. Growth rates ranged from 2.0% in North Dakota to 0.3% in Nevada. Earnings (payrolls, supplements to wages and salaries and proprietors' income) rose 0.64% and grew nationally in every industry. Construction earnings contributed 0.02 percentage points to the 0.64% overall earnings increase, with the largest contributions in Alaska, 0.15 points; Utah, 0.13 points; New Hampshire, 0.11 points; Michigan, 0.10 points; and Oklahoma, 0.08 points. Construction lowered statewide earnings in 12 states, led by Nevada, 0.33 points; Wyoming, 0.10 points; Washington, 0.08 points; and Louisiana, 0.07 points. McGraw-Hill Construction (MHC) and Reed Construction Data offered differing estimates of new construction starts in Augusts, based on data they separately compiled. MHC said on Tuesday that total starts increased 6% from July to August at a seasonally adjusted annual rate but were down 4% year-to-date (YTD) for January-August 2010 compared with the same months of 2009. "After languishing in late spring, the pace of construction starts picked up during July and August, returning activity to the upper half of its recent range," stated Robert A. Murray, vice president of economic affairs for MHC. "That range shows total construction starts essentially stabilizing at a low level, relative to its lengthy slide from 2006 through 2008, but not yet moving up to the point where one could say that renewed expansion is taking hold." Of the three MHC components, nonresidential building starts fell 4% in August and 14% YTD, with commercial building down 23%; manufacturing building, down 30%; and institutional building, down 8%. Nonbuilding construction jumped 24% for the month but dropped 4% YTD, with flat activity for public works being countered by a 27% YTD decline for electric utilities. Residential building slipped 2% in August but advanced 11% YTD. Total nonresidential starts were down 9% YTD. Reed reported on September 17 that total nonresidential starts were up "about 5%" in August, seasonally adjusted (22%, unadjusted), and 5% from January through August YTD. The August gain "was entirely in nonresidential buildings, since heavy construction starts fell slightly after seasonal adjustment," Reed Chief Economist Jim Haughey said. The Architecture Billings Index (ABI), a measure of the number of architecture firms that report higher billings in the previous month than the month before minus the number with lower billings (with the difference centered on 50) inched up in August to 48.2 from 47.9 in July, the American Institute of Architects (AIA) reported on Wednesday. "Project cancelations, regardless of when they happen in the design phase, continue to be the main roadblock to recovery for the construction sector," said AIA Chief Economist Kermit Baker. "Numerous projects have been put on hold indefinitely over the last several months with little hope that they will be resumed. What work...is being done is more along the lines of smaller renovation-type projects, as opposed to design for new buildings." Firms with a predominantly commercial / industrial practice had an ABI of 50.6; multi-family residential, 46.9; institutional, 46.0; and mixed practice, 42.6. The Wall Street Journal on Tuesday explored why stimulus funds have been slow to turn into construction work. "Federal agencies have designated recipients for around 80% of [around $230 billion in funding for infrastructure projects], but paid out only about a third of them to date....Awards worth $8 billion for high-speed rail connections were announced in January, but the Federal Railroad Administration has only distributed 7% of the funds to date. Much of the money is being held up as state and railroad officials struggle to hammer out partnership deals with railroad companies. Few recipients of awards to expand the nation's broadband network have actually started laying cables; the rest are performing work such as environmental assessments and getting local approvals to attach fiber to utility poles....States were required to draft new plans detailing how they would use the extra weatherization money [$5 billion added to a program that had received $450 million in 2009], which were then reviewed by the Energy Department....A major reason for delays in the program was a provision in the stimulus bill to apply the Davis-Bacon Act, which requires that workers be paid the local 'prevailing wage,' as determined by the Department of Labor....Federally subsidized weatherization work had never been subject to Davis-Bacon before, so no wage rates existed...The [Michigan] Department of Human Services and the Detroit [weatherization] agency exchanged several versions of Detroit's advertisement [for contractors] before its language was approved [in January 2010]. It was another two months before the city awarded contracts. Detroit weatherized its first home using stimulus dollars in March 2010." Historic preservation reviews also added to delays.