Data Digest: January jobs, December spending hit decade-plus lows for construction

Nonfarm payroll employment climbed by only 36,000 in January, seasonally adjusted, the Bureau of Labor Statistics (BLS) reported on Friday. The unemployment rate dropped from 9.4% in December, seasonally adjusted, to 9.0% (9.8%, not seasonally adjusted). The unemployment rate in construction was 22.5%, not seasonally adjusted (BLS does not publish seasonally adjusted rates by industry), vs. 24.7% in January 2010. Construction lost 32,000 jobs, seasonally adjusted, likely due in part to widespread exceptionally bad weather conditions during the mid-January reporting period. Construction employment fell for the fifth month in a row, to 5,455,000, down 2.3% from January 2010 and the lowest level since March 1996. BLS posted routine annual revisions to past data, which made April 2006 the peak month for construction employment, at 7,726,000. The drop since then of 2,271,000 (29%) is the longest and steepest of any industry. In contrast, overall private employment fell from December 2007 to March 2010 and rose 1.2% in the past 12 months. Among the five construction employment categories that BLS reports on, heavy and civil engineering construction lost 0.8% in January but gained 1.6% over 12 months, reflecting January’s bad weather but also much of the federally funded stimulus, military base realignment and Gulf Coast hurricane-prevention work in the past year. Residential specialty trade contractors added 0.5% in January but lost 3.9% over 12 months, possibly indicating a recent pickup in multifamily construction. Residential builders shed 0.6% and 5.5%, respectively; nonresidential builders, -1.0% and -1.3%; and nonresidential specialty trade contractors, -1.1% and -2.1%. Architectural and engineering services employment, a harbinger of future demand for construction, slipped 0.1% and 0.8%. Average hourly earnings in construction totaled $25.46, up 9 cents for the month and 32 cents (1.3%) over 12 months. Construction spending in December was at a seasonally adjusted annual rate of $788 billion, 2.5% below the revised November estimate, 6.4% below the December 2010 level and the lowest since July 2000, the Census Bureau reported on Tuesday. The $814 billion for the year was 10% below the 2009 total and lowest full year since 2000. Of the three major Census spending categories, public construction dropped 2.8% from November and 0.3% from December 2010; private nonresidential, -0.5% and -12%; and private residential, -2.2% and -9.8%. In descending order of current size, the leading public components were highways and streets, -1.6% and +7.5%; educational, -3.7% and -11%; public transportation facilities, 0.8% and 0.4%; and sewage and waste disposal, -2.3% and 3.2%. Federal stimulus spending gave a major boost to all of these except educational. The largest private nonresidential category, power (new and retrofitted power plants, renewable-power facilities, and transmission) rose 0.7% and 5.8%. Commercial (retail, wholesale and farm) fell 1.0% and 19%; manufacturing, -1.3% and -25%; private healthcare, -1.1% and -2.9%; and private offices, 0.2% and -27%. Of the three residential components, new single-family climbed 0.5% for the month but fell 4.3% from December 2010; improvements to existing single- and multifamily, -8.3% and -6.0%; and new multifamily, -5.3% and -28%. Census released the first detailed state reports from the 2010 Census on Friday, covering counties in Louisiana, Mississippi, New Jersey and Virginia. The reports, which will cover all states by late March, can help identify areas of likely above-average demand for population-driven construction, such as housing, retail, consumer services and schools (though actual construction depends on availability of funds, of course). Virginia was the only one of these states with roughly the same population growth in the 2000s (13%) as in the 1990s (14%). Articles and maps on the reports in USA Today on Friday showed Virginia’s growth last decade was concentrated between the Washington, D.C. suburbs and north of Richmond, with Loudoun County gaining 84%, while 30 counties far from this concentration lost population. New Jersey added 4.5% (vs. 9% in the 1990s). “Densely settled areas near New York City experienced stagnation or decline, while areas outside Philadelphia and in the state’s coastal and southern sections gained population.” Mississippi added 4.3% (vs. 11%), with a range by county from 50% to -38%. Louisiana, which lost hundreds of thousands of residents after hurricanes in 2005, added 1.4% during the decade (vs. 6% in the 1990s), with a range by parish from 40% to -30%. Demand for industrial space in the first quarter of 2011 “is projected to grow at a 1.7% annualized rate, which is on par with historical averages,” and up from 1.24% in the last quarter of 2010, “suggesting that the sector is improving, the NAIOP Research Foundation (www.naiop.org) reported on Thursday in releasing the Industrial Space Demand Forecast, a new study and model. The model uses the Federal Reserve’s Industrial Production index for manufacturing and the Institute of Supply Management (ISM)’s Purchasing Managers Index (PMI). The PMI, which is based on monthly surveys of purchasing executives at manufacturers, was at the highest level since May 2004 in January, ISM reported on Tuesday. The ISM Prices Index hit the highest reading since July 2008, as 64% of respondents reported paying higher prices for commodities and 1%, lower prices. ISM reported on Thursday that 46% of respondents to its monthly survey of nonmanufacturing purchasing executives said prices had risen, vs. 4% who said they had declined. Construction was listed third among 17 industries reporting higher prices paid. Among items important to construction that were reported higher in price in one or both surveys were: aluminum; copper; diesel fuel; freight charges and fuel surcharges; steel, steel pipe and steel products; and stainless steel.