“Reports from the 12 Federal Reserve districts indicated that economic activity generally continued to expand since the last report, though a few districts indicated some deceleration,” the Fed reported on Wednesday in the latest Beige Book, a summary of informal soundings of businesses in the districts, which are referred to by their headquarters cities. “Some slowing in the pace of growth was noted in the New York, Philadelphia, Atlanta, and Chicago districts. In contrast, Dallas characterized that region’s economy as accelerating. Other districts indicated that growth continued at a steady pace….The Chicago district reported a decline in [manufacturing] activity for construction materials and household….In terms of residential construction, activity has remained generally depressed, with a number of districts reporting a large overhang of distressed properties. However, a number of districts—New York, Cleveland, Atlanta, Chicago, and San Francisco—report improved prospects for development of multi-family rental properties….Nonresidential construction, though widely reported to be at very low levels, rose modestly in the Boston, Chicago, Minneapolis, and Dallas districts, though Chicago noted that public sector projects are becoming smaller. Cleveland observed a pickup in industrial and high-end commercial development but a pullback in healthcare-related projects. Richmond reported some pockets of strength in the retail market. More broadly, contacts in a number of districts expressed a general sense of optimism about the outlook for the second half of 2011. [Cleveland reported] a pickup in construction loan requests for multi-family dwellings. Boston noted an improved lending environment for commercial real estate, and demand for commercial mortgages increased in New York and Dallas….While Boston indicated that firms were able to pass along most input price increases into selling prices, contacts in Philadelphia, Cleveland, Richmond, Atlanta, Chicago, Minneapolis, Kansas City, Dallas, and San Francisco noted only a limited ability to pass through these cost increases to their customers, with manufacturers generally being more successful than retail or construction firms.”
The National Association of Home Builders reported “continuing improvement in the multifamily housing market” on Thursday as the Multifamily Production Index rose for the third consecutive quarter in the first three months of 2011. The index is a weighted average of responses of 68 multifamily builders as to whether the latest quarter was stronger, the same, or weaker than the prior quarter for demand for rental housing (low rent and market rent) and for-sale housing (condos and co-ops). The market-rate rental index rose to a five-year high of 60.5 from 51.7 in the fourth quarter of 2010, marking the first two quarters above a neutral reading of 50 and the eighth straight increase. The low-rent index slipped back to the 2010 third-quarter reading of 45.7 after reaching 48.7 in the fourth quarter. The for-sale index retreated to 23.4 from 24.7.
The number and rate of seasonally adjusted job openings in construction rose for the second straight month in April, to 96,000 (1.7 openings per 100 employees plus openings on the last business day of the month), from 68,000 (1.2 per 100) in March and 55,000 (1.0 per 100) in February, the Bureau of Labor Statistics reported on Tuesday. In contrast, the rate for the total private sector remained virtually steady (2.4 per 100 in February and April, 2.5 in March). The hire rate for construction was unchanged from March to April at 6.1 hires during the month per 100 employees, after falling from 6.7 in February. The rate of total separations (mostly quits, layoff and discharges, and a few “other”) in construction climbed to 6.3 per 100 employees in April from 6.0 in March, 5.9 in February and 5.1 in January. The quit rate in construction rose to 1.6 per 100 in April from 1.3 in March, 1.1 in February and 1.0 in January. The layoff and discharge rate climbed to 4.3 per 100 in April, not seasonally adjusted, from 3.8 in March. A possible explanation is that more workers are being laid off from construction jobs as new projects remain scarce, and more are quitting as jobs elsewhere become more numerous.
Employer costs for employee compensation—wages, salaries and benefits—averaged $28.10 per hour worked in March for all private-sector employees and $31.59 for construction industry workers, BLS reported on Wednesday. Wages and salaries accounted for $19.85 (71%) of private-sector compensation and $21.92 (69%) of construction pay. Some benefits were distributed quite differently: workers’ compensation accounted for 1.5% of private sector pay but 4.2% for construction employees; defined benefit retirement contributions, 1.5% and 3.5%, respectively; overtime and premium pay, 0.9% and 2.0%; vacation pay, 3.5% and 2.0%; and holiday pay, 2.1% and 1.3%.
“Real gross domestic product (GDP) increased in 48 states and the District of Columbia in 2010,” the Bureau of Economic Analysis reported on Tuesday. “Durable-goods manufacturing, retail trade, and finance and insurance were leading contributors to the upturn in U.S. economic growth. U.S. real GDP by state grew 2.6% in 2010 after declining 2.5% in 2009….In contrast to other industries, construction continued to be a drag on real GDP growth. Nationally, construction declined for the sixth consecutive year and detracted from growth in most states. Nevada was particularly hard hit—construction subtracted nearly two percentage points from the state's real GDP growth.” Construction contributed 0.2 percentage points to state GDP growth in Vermont (out of 3.2% real growth), North Dakota (out of 7.1%), West Virginia (4.0%), and Indiana (4.6%). An AGC analysis of the data showed construction contributed more than 5% of state GDP in 2010 in Montana, Hawaii and Nevada. At the other extreme were the District of Columbia, 0.9%; Connecticut, 2.5%; Delaware and Ohio, 2.6% each. Construction accounted for 3.5% of U.S. GDP in 2010.
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