Tag Archives: American General Contractors of America

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Construction Employment Gains Remain Spotty In July

 

Construction employment continued its spotty improvement in July, as more states posted year-over-year gains but most states posted decreases compared with June, according to an analysis by the Associated General Contractors of America of Labor Department data.

Association officials said the steady improvement in employment in many states was welcome news, but cautioned that the industry’s recovery was still fragile.

“Today’s report shows the fragile and fragmentary nature of the industry’s recovery,” said Ken Simonson, the association’s chief economist. “Construction employment increased in 37 states during the past 12 months — the largest number with gains since early last year—but only two states have surpassed their pre-recession peaks, and barely a third of states added construction jobs between June and July.”

Both the widespread annual gains and monthly losses were consistent with national totals for July, Simonson noted. Labor Department data released earlier this month showed construction employment rose 3.0% from July 2012 to July 2013, but slipped by 0.1%, seasonally adjusted, in the latest month.

The largest year-over-year percentage increase in construction jobs occurred in Wyoming (16.7%, 3,500 jobs), followed by Mississippi (12.3%, 5,800 jobs) and Hawaii (11.6%, 3,400 jobs). Texas added the most jobs over the past 12 months (33,100, 5.7%), followed by California (17,800, 3.0%) and Florida (15,700, 4.6%).

The District of Columbia and 13 states lost construction jobs from July 2012 to July 2013. The steepest declines occurred in Indiana (-6.7%, -8,300 jobs) and South Dakota (-6.7%, -1,400 jobs). The biggest losses were in Indiana and Ohio (-6,300, -3.5%).

Only 18 states added construction employees between June and July on a seasonally adjusted basis, while 30 states and D.C. lost jobs. There was no change in Massachusetts or Texas.

Three states had one-month employment gains of more than 3 percent: Kentucky (3.9%, 2,500 jobs), Hawaii (3.5%, 1,100 jobs) and Wyoming (3.4%, 800 jobs). Florida added the largest number of jobs for the month (3,700, 1.1%), followed by Georgia (2,600, 1.8%), Pennsylvania (2,600, 1.8%), Kentucky and Colorado (2,400, 1.9%).

The steepest one-month percentage decline in construction employment occurred in Montana (-4.1%, -900 jobs), followed by Idaho (-3.1%, -1,000 jobs). The largest drop in employment for the month occurred in California (-7,300, -1.2%), followed by Indiana (-3,400, -2.8%) and Ohio (-3,100, -1.8%).

Association officials said that after years of layoffs and slow demand, many unemployed skilled construction workers had likely either retired or switched industries. They noted that should demand for new construction expand, many firms indicate they are likely to face shortages of available skilled workers.

“While the industry’s recovery has been tentative and remains very fragile, any jump in demand would be as challenging for firms as it would be welcome,” said Stephen E. Sandherr, the association’s chief executive officer. “The biggest question for many firms is whether there will be enough skilled workers available if things heat up.”

 

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Construction Unemployment Hits 9.1%, Lowest July Mark Since 2008

 

The unemployment rate for construction workers fell to the lowest July level in five years last month, even though employment has stagnated in the past four months, according to an analysis of new government data by the Associated General Contractors of America.

Association officials urged Washington leaders to act on stalled infrastructure funding measures to help jump start construction hiring.

“Although the unemployment rate for experienced construction workers came down to 9.1% in July, many of those workers have left the industry for other jobs, school or training programs, or retirement,” said Ken Simonson, the association’s chief economist. “While the industry has added workers in the past year, employment growth has been negligible recently.”

The unemployment rate for workers who last worked in construction declined to 9.1% from 12.3% in July 2012, not seasonally adjusted, and the number of unemployed construction workers dropped by 227,000 to 767,000.

The number of unemployed workers with prior construction experience was the lowest July total since July 2007, while the unemployment rate was the lowest July rate since 2008, Simonson noted.

Construction employment in July totaled 5,793,000, seasonally adjusted, up by 166,000 or 3%t from July 2012 but down by 6,000 from the revised June level. Although both residential and nonresidential contractors have added workers in the past year, employment growth in July occurred only on the residential side.

Residential building and specialty trade contractors added 6,300 employees in July and 92,100 (4.5%) over 12 months. Nonresidential building, specialty trade and heavy and civil engineering construction firms lost 11,500 workers in June but added 74,300 (2.1%) from a year earlier. Architectural and engineering services employment rose by 2.3% over the year, suggesting further modest gains in construction ahead.

“The tilt in hiring toward residential construction and the recent flattening of overall industry employment fit with Thursday’s report from the Census Bureau on construction spending through June,” Simonson said. “Those figures showed strong year-over-year growth in residential construction, little change in private nonresidential and worsening declines in public construction. These patterns, along with the slow growth in design industry employment, suggest that contractors will remain cautious about adding workers this year.”

Association officials said that declines in public construction activity, in particular, were contributing to the recent pause in construction hiring. They urged elected officials in Washington to set aside the kind of partisan bickering that has caused vital infrastructure investment bills to stall in both the House and the Senate.

“After months of promising growth, construction employment has flattened and is at risk of backsliding,” said Stephen E. Sandherr, the association’s chief executive officer. “Washington leaders should help get construction hiring back on track by passing key infrastructure funding measures, not sacrifice good jobs in the name of partisan point scoring.”

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Construction Spending Slips As Residential Market Pauses; Private Nonresidential, Public Spending Decline

 

Total construction spending cooled in June as residential building hit the pause button, while private nonresidential and public construction also declined, according to an analysis of new Census Bureau data by the Associated General Contractors of America.

Association officials urged lawmakers in Washington to make infrastructure investment a top federal priority for the fiscal year beginning in October.

“New single-family and multi-family construction both had rare slowdowns in June, while private nonresidential construction remained stuck in neutral as it has all year and the long slump in public construction worsened,” said Ken Simonson, the association’s chief economist. “For the rest of 2013, private construction appears likely to grow again but public spending is showing no signs of a recovery.”

Construction put in place totaled $884B in June, down 0.6% from May but up 3.3% from June 2012. Those earlier figures included steep upward revisions to residential improvements as the Census Bureau corrected improvements data back to January 2012. Despite the dip in June, spending that month was still the second-highest level since August 2009.

Private residential spending was flat for the month and 18% higher than in June 2012. New single-family construction slid 0.8% in June but was 28% above the year-ago mark. New multi-family spending fell 3.3% in June but shot up 41% year-over-year.

Private nonresidential spending slipped 0.9% in June and rose 1.4% year-over-year. Public construction spending shrank 1.1% for the month and 9.3% over 12 months.

“The major private nonresidential segments show divergent trends,” Simonson said. “Power construction, which includes oil and gas fields and pipelines as well as electricity, climbed for the fifth straight month in June, even after Census posted large upward revisions for May and April. But such major categories as manufacturing, health care and retail construction remain in the doldrums. Meanwhile, the largest public categories —highways and education construction — are now plummeting at double-digit rates.”

Association officials warned that the plunge in public construction will worsen unless policy makers in Washington can produce a budget that puts more money into vitally needed highway, water and other infrastructure projects. They noted that spending on federal projects in June was at the lowest level since September 2008 and was 29% below its latest peak in August 2011.

“Infrastructure spending is essential for economic growth, health and safety,” said Stephen E. Sandherr, the association’s chief executive officer. “Congress should make adequate funding for infrastructure a top priority next month when it works on appropriations bills to fund the government for the year beginning in October.”

 

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Valley Has 3rd Highest Increase Of New Jobs As Construction Employment Up In More U.S. Metro Areas

 

Construction employment increased in 191 out of 339 metro areas between June 2012 and June 2013, declined in 97 and was flat in 51, according to a new analysis of federal employment data released today by the Associated General Contractors of America.

Association officials welcomed the construction employment gains but cautioned that demand remained spotty amid continued efforts to cut federal investments in vital infrastructure projects, including for clean water systems.

Two metro areas tied for the largest number of new jobs added in the past 12 months: Boston-Cambridge-Quincy, Mass. (9,900 jobs, 19%) and Houston-Sugar Land-Baytown, Texas (9,900 jobs, 6%). They were followed closely by Phoenix-Mesa-Glendale (9,600 jobs, 11%) and Los Angeles-Long-Beach-Glendale (9,200 jobs, 8%).

“Although construction activity remains extremely spotty, with strong residential activity offsetting lackluster private nonresidential investment and shrinking public construction spending, workers are being hired in more and more metro areas,” said Ken Simonson, the association’s chief economist. “There is widespread good news for now but the industry remains far below previous employment peaks in most markets.”

The number of metro areas with construction employment increases rose for the fifth consecutive month in June after bottoming out at 146 gainers in January, Simonson noted. The June total of 191 metro areas adding construction jobs was the largest number since March 2012.

The largest percentage gains since June 2012 occurred in Pascagoula, Miss. (33%, 1,500 jobs), followed by Eau Claire, Wis. (31%, 1,000 jobs).

The largest job losses were in Riverside-San Bernardino-Ontario, Calif. (-5,500 jobs, -9%), followed by Northern Virginia (-2,900 jobs, -4%). The steepest percentage declines in construction employment occurred in Rockford, Ill. (-13%, -600 jobs) and Pocatello, Idaho (-13%, -200 jobs). They were followed by Gary, Ind. (-12%, -2,500 jobs) and Yuma (-12%, -300 jobs).

Association officials said that despite growing signs of a construction recovery, the industry still faces challenges, including continued efforts to cut federal investments in infrastructure projects. They noted that a Congressional subcommittee voted last week to cut funding for water and wastewater infrastructure by 75% for next year, from $2.36B in 2013 to $600M in 2014.

“Construction employment is heading in the right direction for now, but demand remains weak and the industry’s recovery is still very fragile,” said Stephen E. Sandherr, the association’s chief executive officer. “Beyond the obvious threats to the broader economy, cutting investments in vital infrastructure projects puts some of these new construction jobs at risk.”

 

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New Coalition To Help Bring Relief To Construction Sector That Pays Highest Corporate Tax Rate

 

The chief executive officer of the Associated General Contractors of America, Stephen E. Sandherr, issued the following statement today in reaction to the launch of the new Coalition for Fair Effective Tax Rates.

The association is a founding member of the new coalition, which will work to ensure that comprehensive tax reform efforts focus on lowering the effective corporate tax rates – what firms actually pay in total federal taxes.

“The launch of this new coalition will help bring needed tax relief to a construction sector that currently pays the highest effective corporate tax rate of any industry type. That relief can’t come soon enough as the hard-hit construction industry pays an effective corporate tax rate of 31%, the highest level in the economy and more than double the rate some sectors pay, according to the most recent analysis by the U.S. Department of the Treasury.

“Given federal officials’ repeated insistence on wanting to put in place policies to boost employment levels, it is hard to understand why our tax policies discriminate against the labor-intensive construction industry. Fortunately, members of Congress have an opportunity to address the disparity among effective rates as they undertake broader, comprehensive tax reform. These reform efforts need to focus on, and ultimately lower, the effective corporate tax rate employers actually pay, instead of the ostensible, pre-deductions, corporate rate that is so often cited.

“In addition to serving as a founding member of this new coalition, the Associated General Contractors of America will continue to work with federal officials to educate them about the disproportionate tax burden imposed on construction employers and work to promote the kind of tax relief needed to encourage more growth in construction employment.”

 

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States Split Evenly Between Construction Job Gains, Losses In June

 

Equal numbers of states gained and lost construction jobs in June, highlighting the fragmentary nature of the industry’s recovery, according to an analysis by the Associated General Contractors of America of Labor Department data.

Association officials added that, despite the fact most states added jobs year-over-year, construction employment levels are below peak levels for nearly every state.

“Job gains and losses were quite different last month from the patterns in the past several years as some lagging states — notably Nevada — added workers, while former high-flyers such as Texas, had layoffs,” said Ken Simonson, the association’s chief economist. “On a year-over-year basis, construction employment has increased in more than two-thirds of the states, but nearly all states lag their pre-recession peaks for construction jobs.”

In June, 23 states and the District of Columbia added construction jobs, while 24 states shed them. Nevada had the largest one-month percentage increase (5%, 2,500 jobs), followed by North Dakota (4.2%, 1,300) and Iowa (4%, 2,600).

Illinois added the most jobs in June (5,400, 3%), followed by Washington (4,100, 2.9%), Iowa and Nevada. There was no change in Alaska, New Hampshire and Oklahoma.

Connecticut experienced the sharpest decline in construction employment from May to June (-3.4%, -1,900), followed by West Virginia (-3%, -1,100) and Vermont (-2.9%, -400). Texas lost the largest number of jobs between May and June (-8,500, -1.4%), followed by Pennsylvania (-3,600, -1.6%).

Over the past 12 months, 36 states added construction jobs — the larger number with year-over-year gains since May 2012. Wyoming had the largest 12-month percentage increase (10.4%, 2,200 jobs), closely followed by Louisiana (9.7%, 12,200) and Arizona (9.7%, 11,100). California added the most jobs (32,200, 5.5%), followed by Texas (31,400, 5.4%), Louisiana and Florida (12,200, 3.6%).

Among the 14 states with construction job losses between June 2012 and June 2013, South Dakota lost the highest percentage (-6.2%, -1,300), followed by Kentucky (-5.2%, -3,500) and Indiana (-5.1%, -6,400). Indiana had the largest number of jobs lost, followed by Ohio (-3,900, -2.2%), Kentucky and Pennsylvania (-3,500, -1.6%).

Two states — Louisiana and North Dakota—set new construction employment records in June, but most remain far below their pre-recession peaks, Simonson added. Despite its strong showing in June, Nevada’s construction employment last month was still 64% below the June 2006 peak.

Similarly, construction employment in Florida and Arizona last month was 49% below the June 2006 record highs, in spite of big one-year gains.

Association officials cautioned that the construction industry remains fragile as private sector demand has cooled recently even as public sector investments in construction remain relatively weak. They urged administration officials to avoid putting in place costly new regulatory measures and urged Congress to act on vital infrastructure legislation like the Water Resources Development Act.

“With current conditions, one misguided regulation and one missed investment opportunity could cost a lot of hard working construction workers their jobs,” said Stephen E. Sandherr, the association’s chief executive officer.

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Construction Unemployment Falls To Lowest June Level Since 2008

 

The unemployment rate for construction workers fell below double digits in June for the first time since 2008 as every segment of the industry added employees, according to an analysis of new government data by the Associated General Contractors of America.

Association officials said the relatively positive jobs report for the sector highlights the need to address potential shortages of skilled and entry-level workers.

“Construction employment in June was the highest since August 2009,” said Ken Simonson, the association’s chief economist. “But employment is still down by one-quarter from the peak more than seven years ago. Many of those laid-off workers have left the industry — whether for employment elsewhere, more education or retirement —and construction companies face a looming worker shortage.”

The unemployment rate for workers who last worked in construction declined to 9.8% from 12.8% in June 2012, not seasonally adjusted, and the number of unemployed construction workers dropped by 214,000 to 825,000. The latest numbers were the best June figures for each series since 2008, Simonson noted.

Construction employment in June totaled 5.812M, an increase of 190,000 or 3.4% over the past year. Aggregate weekly hours of all new and existing construction employees expanded by an even larger 4.7%, as companies put more workers on overtime.

“The number of unemployed workers with construction experience has fallen to low enough levels that firms in a growing number of locations and segments are having trouble finding people with the needed skills,” Simonson said. “Contractors have filled the gap so far by adding to workers’ hours but this ‘solution’ may be reaching its limit.”

Residential and nonresidential contractors have added workers in nearly equal numbers, Simonson observed. Residential building and specialty trade contractors added 5,200 in June and 90,200 (4.4%) over 12 months.

Nonresidential building, specialty trade and heavy and civil engineering construction firms grew by 8,400 workers in June and 99,800 (2.8%) from a year earlier. In a favorable sign for future construction growth, architectural and engineering services employment rose by 2.6% over the year.

Association officials said some of the future worker shortages that will come if the industry continues to add jobs over the coming months might still be averted. They urged education officials to rebuild skills-based, or vocational, educational programs designed to help prepare students for careers in construction and manufacturing. And they urged Congress and the administration to reject the arbitrary caps on construction workers that are currently included in the Senate’s immigration legislation.

“Now that demand for construction is finally picking up, it is vital to ensure that the industry can find enough qualified workers,” said Stephen E. Sandherr, the association’s chief executive officer. “There are actions that policy makers should take now before a worker shortage cuts short the industry’s recovery.”

 

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Valley Adds Most New Jobs Nationally As Construction Employment Increases In 185 Of 339 Metro Areas

 

It may be hot in the Valley, but that’s nothing compared to the sizzling construction employment market.

Construction employment increased in 185 out of 339 metro areas between May 2012 and May 2013, with the Valley adding the most new jobs, 13,000, for an increase of 15%.

Employment declined in 115 areas and was stagnant in 39, according to a new analysis of federal employment data released today by the Associated General Contractors of America.

Association officials said the number of metro areas adding jobs, and the pace at which construction employment is expanding in those metro areas continues to grow.

“It appears that the months-long growth in private sector demand for a host of residential and non-residential construction work is finally translating into significant numbers of new construction jobs in many parts of the country,” said Ken Simonson, the association’s chief economist.

“Even though some metro areas will continue to lose construction jobs, sector employment is likely to continue expanding in most parts of the country for the immediate future.”

Pascagoula, Miss., added the highest percentage of new construction jobs (47%, 2,000 jobs), followed by Eau Claire, Wis. (29%, 900 jobs); Hanford-Corcoran, Calif. (29%, 200 jobs) and Napa, Calif. (25%, 600 jobs).

Behind Metro Phoenix is adding the most new jobs was Dallas-Plano-Irving, Texas (9,700 jobs, 9%); Boston-Cambridge-Quincy, Mass. (9,100 jobs, 18%); Houston-Sugar Land-Baytown, Texas (8,900 jobs, 5%) and Fort Worth-Arlington, Texas (8,800 jobs, 15%).

The largest job losses were in Riverside-San Bernardino-Ontario, Calif. (-3,100 jobs, -5%), followed by Cincinnati-Middletown, Ohio-Ky. (-2,800 jobs, -7%); Sacramento–Arden-Arcade–Roseville, Calif. (-2,800 jobs, -7%) and Northern Virginia (-2,600 jobs, -4%). Rockford, Ill. (-18%, -800 jobs) and Steubenville-Weirton, Ohio-W.V. (-18%, -300 jobs) lost the highest percentage.

Association officials said the new, mostly positive, figures were welcome news for a construction industry that bore the brunt of the recent economic downturn. But they cautioned that years of dwindling employment prospects and neglect of vocational and skills-based educational programs have discouraged many potential job seekers from considering careers in construction.

They said contractors in some faster growing metro areas were likely to have a tougher time finding skilled workers if the industry continues to add jobs.

“It is encouraging to see construction employment on the rebound in so many parts of the country,” said Stephen E. Sandherr, the association’s chief executive officer. “We need to make sure, however, that we have education and immigration policies in place that encourage more people to consider high-paying construction careers.”

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Construction Unemployment Drops To 10.8%, Lowest May Mark In 5 Years

 

Construction employment increased by 7,000 in May, helping to push the industry’s unemployment rate down to the lowest May level in five years, according to an analysis of new government data by the Associated General Contractors of America.

Association officials said the relatively positive jobs report for the sector underscores the need to address potential shortages of skilled workers.

“Although the monthly job gain in May was modest, both residential and nonresidential construction have been adding workers at roughly double the rate of the overall economy in the past year,” said Ken Simonson, the association’s chief economist.

“At the same time, formerly unemployed construction workers are finding jobs in other sectors, retiring or going back to school. These conditions may lead abruptly to worker shortages in parts of the industry, such as welders and pipefitters.”

Construction employment in May totaled 5.8M, an increase of 189,000 or 3.4% over the past year. Aggregate weekly hours of all new and existing construction employees expanded by 5.2% from a year earlier.

The unemployment rate for workers who last worked in construction dropped to 10.8% from 14.2% in May 2012, not seasonally adjusted, and the number of unemployed construction workers shrank over the year by 259,000 to 891,000. The latest numbers were the best May figures for each series since May 2008, Simonson noted.

Employment expanded in both residential and nonresidential construction in May, Simonson observed. Residential building and specialty trade contractors added 5,500 workers for the month and 94,400 (4.6%) over 12 months.

Nonresidential building, specialty trade and heavy and civil engineering construction firms grew by 1,700 workers in May and 95,500 (3.7%) from a year earlier. In a positive indicator for future construction growth, architectural and engineering services employers added 2.1% to their workforces over the year.

Association officials said there was still time to avoid some of the future worker shortages that will come if the industry continues to add jobs over the coming months. They urged education officials to rebuild skills-based, or vocational, educational programs designed to help prepare students for careers in construction and manufacturing. And they urged Congress and the administration to reject the arbitrary caps on construction workers that are currently included in proposed immigration legislation.

“Just as contractors found ways to cope with the downturn, we need to make sure we are able to address the challenges that will come with the sector’s eventual recovery,” said Stephen E. Sandherr, the association’s chief executive officer. “One of the biggest challenges this industry faces is limited supply of skilled construction workers available to meet the kind of demand we all hope the industry will soon experience.”

 

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Construction Employment Up In 170 Of 339 Metro Areas As Private Sector Demand Accelerates

 

Construction employment increased in 170 out of 339 metropolitan areas between April 2012 and April 2013, declined in 123 and was stagnant in 46, according to a new analysis of federal employment data released today by the Associated General Contractors of America.

Association officials noted that a majority of metro areas are adding construction jobs as private sector demand accelerates in many parts of the country.

“Demand for construction continues to grow in many parts of the country amid increasing private sector investments in new residential, energy and supply chain facilities like factories, rail lines and warehouses,” said Ken Simonson, the association’s chief economist.

“These private sector gains appear strong enough in many parts of the country to outpace declining public sector investments in infrastructure and buildings.”

Pascagoula, Miss. added the highest percentage of new construction jobs (45%, 1,700 jobs), followed by Napa, Calif. (36%, 800 jobs); Merced, Calif. (19%, 300 jobs); Baton Rouge, La. (16%, 6,600 jobs) and Lake Charles, La. (16%, 1,400 jobs).

Two metro areas in Texas virtually tied for the most jobs added in the past 12 months: Dallas-Plano-Irving (11,500 jobs, 11%) and Houston-Sugar Land-Baytown (11,400 jobs, 6%).

They were followed by Los Angeles-Long Beach-Glendale, Calif. (9,400 jobs, 9%); Fort Worth-Arlington, Texas (7,800 jobs, 13%) and Phoenix-Mesa-Glendale (7,500 jobs, 9%).

The largest job losses were in Chicago-Joliet-Naperville, Ill. (-5,900 jobs, -5%), followed by Northern Virginia (-3,200 jobs, -5%); Cincinnati-Middletown, Ohio-Ky. (-2,400 jobs, -6%) and Raleigh-Cary, N.C. (-2,300 jobs, -8%). Bellingham, Wash. (-20%, -1,300 jobs) lost the highest percentage.

Other areas experiencing large percentage declines in construction employment included Decatur, Ill. (-18%, -700 jobs); Eau Claire, Wis. (-17%, -500 jobs) and Rockford, Ill. (-17%, -700 jobs).

Association officials said that improving construction employment was masking longer-term problems that could come from declining public sector investments. They noted, for example, that economic growth could suffer as aging transportation infrastructure forces firms to pay more to ship goods.

At the same time, increasing construction employment means more areas could experience worker shortages in the near future amid a lack of available workers with experience in certain key construction skills.

“Declining investments in infrastructure and other public assets could ultimately undermine the very growth that is currently boosting employment,” said Stephen E. Sandherr, the association’s chief executive officer. “With hiring on the rebound in many areas, we also need to rebuild vocational education programs and rethink immigration construction caps to ensure there are enough skilled workers available to meet growing demand.”

 

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Construction Employment Up In 152 Of 339 Metro Areas; Spending Up As Well

 

Construction employment increased in 152 out of 339 Metro areas between March 2012 and March 2013, declined in 126 and was stagnant in 61, according to a new analysis of federal employment data released today by the Associated General Contractors of America.

Association officials noted that many metro areas are adding jobs as construction spending increased 4.8%, or $38.9B, during the same time frame.

“Today’s figures on employment by metro area and construction spending nationally in March highlight the uneven and fragile recovery that construction is experiencing,” said Ken Simonson, the association’s chief economist. “The totals are up on a year-over-year basis, and should continue to improve during the remainder of 2013, but not every sector or region will do well.”

Pascagoula, Miss., added the highest percentage of new construction jobs (47%, 1,700 jobs) followed by Fargo, N.D. (21%, 1,300 jobs); Merced, Calif. (19%, 300 jobs); Anchorage, Alaska (18%, 1,500 jobs); Corpus Christi, Texas (18%, 4,000 jobs) and Salinas, Calif. (18%, 700 jobs).

Dallas-Plano-Irving, Texas (12,000 jobs, 11%) added the most jobs. Other areas adding a large number of jobs included Houston-Sugar Land-Baytown, Texas (8,500 jobs, 5%); Baltimore-Towson, Md. (7,700 jobs, 12%) and Los Angeles-Long Beach-Glendale, Calif. (7,500 jobs, 7%).

The largest job losses were in Chicago-Joliet-Naperville, Ill. (-2,700 jobs, -3%) and Northern Virginia (-2,700 jobs, -4%); followed by Cincinnati-Middletown, Ohio-Ky.-Ind. (-2,600 jobs, -7%); Detroit-Livonia-Dearborn, Mich. (-2,300 jobs, -14%) and Raleigh-Cary, N.C. (-2,200 jobs, -8%).

Monroe, Mich. (-19%, -500 jobs) lost the highest percentage. Other areas experiencing large percentage declines in construction employment included Rockford, Ill. (-18%, -700 jobs); Bellingham, Wash. (-15%, -1,000 jobs) and Pocatello, Idaho (-15%, -200 jobs).

Simonson noted that construction spending nationally in March was 4.8% higher than in March 2012, but down 1.7% from a month earlier, according to new Census Bureau data. Only private residential construction spending grew in both time periods, rising 0.4% for the month and 18% year-over-year.

Private nonresidential spending retreated 1.5% from the February level, but increased 2.8% from March 2012. Public construction activity dropped 4.1% and 5.4%, respectively.

“For the rest of the year, the best performing categories are likely to be multifamily housing, power and energy, manufacturing, warehouses and private transportation while most public segments will continue to languish,” Simonson added.

“For the year as a whole, I expect both residential and private nonresidential construction spending to top 2012 totals by 10 to 15%, while public construction will slip 2 to 5%.”

 

2012 AGC President Joseph Jarboe with ABA Executive Director Mark Minter.

AGC Honors Arizona Builders' Alliance's Minter and McMullen

Arizona Builders’ Alliance (ABA) Executive Director Mark Minter and Assistant Executive Director Carol McMullen were honored recently at the National Associated General Contractors (AGC) of America Annual Convention in Palm Springs, Calif.

National AGC President Joseph Jarboe recognized and thanked the two at the annual leadership lunch for their years of service to the industry, AGC and ABA.

This award is given yearly to recognize staff for their years of service, according to the AGC.

Minter has been with the association for 35 years, and McMullen has been with the association for 30 years.

Carol McMullen with 2012 AGC President Joseph Jarboe.

Carol McMullen with 2012 AGC President Joseph Jarboe.

 

 

 

 

 

 

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Construction Employment Increases In 30 States Between February and March

 

Construction employment increased in 30 states in March as the industry expanded but at a slower pace than in February, according to an analysis by the Associated General Contractors of America of Labor Department data.

Association officials cautioned, however, that many states remain vulnerable to construction cutbacks from newly enacted and proposed decreases in federal funding for infrastructure.

“A majority of states are adding jobs month by month and year-over-year,” said Ken Simonson, the association’s chief economist. “The expansion appears poised to continue for residential and private nonresidential construction. But investment in infrastructure and public buildings is still on a downward path. That will keep employment down in states with a large federal presence.”

He added that construction employment nationwide rose for the 10th consecutive month in March, by 18,000, following an increase of 49,000 in February.

Simonson noted that hiring for recovery work from Hurricane Sandy may be the reason New York had the largest increase in construction employment between February and March (6,000 jobs, 1.9%) and Connecticut had the largest percentage increase (5.7%, 2,900 jobs).

Florida added the second-largest number of construction jobs for the month (5,500, 1.6%), while Arkansas was second in percentage increase (4.5%, 2,000 jobs).

Arizona’s construction employment increased by 1,400 jobs (a 1.2% increase) in March vs. February. Since March 2012, Arizona has added 8,300 jobs (a 7.3% increase), sitting at No. 5  nationally for the past year.

Twenty states and the District of Columbia lost construction jobs between February and March. The largest losses occurred in Missouri (-3,400 jobs, -3.2%). Ohio had the second-highest loss of jobs (-3,300, -1.9%), followed by Michigan, which had the second-highest percentage decline (-2.4%, -3,100 jobs).

Simonson reported that 31 states and D.C. added construction jobs from March 2012 to March 2013 and 19 states lost workers. Alaska led all jurisdictions in the percentage of new construction jobs (11.4%, 1,900 jobs); followed by Hawaii (10.7%, 3,100 jobs); Utah (8.7%, 6,000 jobs) and Louisiana (8.6%, 10,700 jobs). California added the most new construction jobs over the past 12 months (41,000, 7.1%), followed by Texas (39,800 jobs, 6.9%).

Among the 19 states losing construction jobs during the past year, Rhode Island lost the highest percentage (-9.6%, -1,600 jobs); followed by Montana (-8.1%, -1,900 jobs) and South Dakota (-7.7%, -1,700 jobs). Ohio lost the most jobs (-9,500 jobs, -5.2%); followed by Illinois (-8,500 jobs, -4.4%) and North Carolina (-5,300 jobs, -3.0%).

Association officials said the cuts in federal funding for construction enacted in March would push employment totals lower in states with large military and federal civilian facilities. They urged policy makers to make infrastructure investment a priority even while cutting other categories of federal spending to bring down deficits.

“Shortchanging investment in the nation’s infrastructure hurts not just construction workers but anyone who relies on good roads, air travel or drinking water,” said Stephen E. Sandherr, the association’s chief executive officer. “We need to make urgent repairs and new investments in transportation and environmental infrastructure before our aging and overused systems begin to drag on economic growth.”

 

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Construction Materials Prices Flat in March; Spikes in Key Items Leave Contractors Vulnerable as Pricing Remains Flat

 

Prices for construction materials were flat in March, as plunging diesel fuel and metals prices offset increases in items used in new housing and nonresidential building renovations, according to an analysis of new federal figures released today by the Associated General Contractors of America.

Association officials noted that contractors have kept the prices they charge to build structures level, leaving their margins vulnerable to price spikes for key inputs.

“Thanks to a recent, sharp drop in diesel fuel prices last month—along with continuing declines in steel, copper and aluminum prices—overall construction costs were unchanged from February and up only 0.9 percent over the past year,” said Ken Simonson, chief economist for the construction trade association.

“However, building contractors had to absorb another month of increases in the cost of lumber and plywood, gypsum products, construction plastics, paint and roofing materials.”

The largest monthly price decrease among construction inputs occurred in the producer price index for diesel fuel, which tumbled 6% in March and 6.7% over 12 months. There were also monthly and year-over-year decreases in the indexes for copper and brass mill shapes, which fell 2.6% and 5.5%, respectively; steel mill products, down 0.4% and 9.5%; and aluminum mill shapes, down 0.1% and 2.7%.

In contrast, the producer price index for lumber and plywood jumped 3.7% since February and 17.7% since March 2012. The index for gypsum products such as wallboard and plaster climbed 0.7% and 17.9%, respectively.

The cost of plastic construction products rose 0.5% and 1.5%, while the index for architectural coatings such as paint increased 0.4 percent and 0.6%, and the index for prepared asphalt and tar roofing and siding products rose 0.3% and 8.6%.

“Contractors have held the line on pricing, even as costs shoot up for some items they buy,” Simonson observed. “The net effect of these diverse changes is that some contractors may be squeezed out of business if they are caught by an unanticipated price spike.”

Simonson noted that the indexes for new nonresidential buildings — the government’s measure of what contractors say they would charge to construct specific building types—were little changed over the past month and year.

The index for new school construction declined 0.4% in March and edged up only 0.5% over 12 months. A recently introduced index for healthcare construction dipped 0.1% in March, leaving it unchanged on net from its starting level last June. Indexes for new office, industrial and warehouse buildings were flat in March and increased between 1.0%  and 2.3% over the past year.

Association officials noted that years of relatively weak demand for construction services have depleted many contractors’ reserves, leaving them particularly vulnerable to sudden fluctuations in materials prices.

“It is going to take a lot more growth in construction demand before many contractors have the cushion needed to protect themselves from future price surges,” said Stephen E. Sandherr, the association’s CEO.

 

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Construction Employment Increases in Metro Areas, but Spending Cuts Pose Risks

 

Construction employment increased in 158 out of 339 metropolitan areas between February 2012 and February 2013, declined in 132 and was stagnant in 49, according to a new analysis of federal employment data released today by the Associated General Contractors of America.

Association officials noted that the industry’s long-awaited recovery could prove fleeting if public construction spending continues to decline and a reported immigration reform deal could undermine efforts to recruit skilled workers.

“While construction employment continues to decline in many parts of the country, the number of communities experiencing gains continues to expand,” said Ken Simonson, the association’s chief economist. “But the twin threats of additional public sector construction cuts and a looming shortage of certain types of construction workers could hurt the industry just as it is beginning to recover.”

Pascagoula, Miss., added the highest percentage of new construction jobs (51%, 1,800 jobs) followed by El Centro, Calif. (23%, 300 jobs); Anchorage, Alaska (22%, 1,800 jobs), Fargo, N.D. (20%, 1,200 jobs) and Merced, Calif. (20%, 300 jobs).

Arizona added 8,400 jobs, an 8% increase.

Houston-Sugar Land-Baytown, Texas (13,200 jobs, 8%) added the most jobs. Other areas adding a large number of jobs included Dallas-Plano-Irving, Texas (10,700 jobs, 10%); Los Angeles-Long Beach-Glendale, Calif. (8,500 jobs, 8%) and Fort Worth-Arlington, Texas (7,200 jobs, 12%).

The largest job losses were in Northern Virginia (-3,100 jobs, -5%); followed by Cincinnati-Middletown, Ohio-Ky.-Ind. (-2,400 jobs, -7%); Raleigh-Cary, N.C. (-2,300 jobs, -8%); Charleston, W.V. (-2,100 jobs, -15%) and Detroit-Livonia-Dearborn (-2,100 jobs, -13%).

Monroe, Mich. (-22%, -500 jobs) lost the highest percentage. Other areas experiencing large percentage declines in construction employment included Atlantic City-Hammonton, N.J. (-20%, -1,000 jobs) and Rockford, Ill. (-18%, -700 jobs).

Association officials noted that the rebound in construction employment in many parts of the country is taking place despite a 17% decline in public sector construction spending during the past four years. They added that additional cuts, including $4B in construction cuts from the federal sequester, would have a significant impact, especially on firms that specialize in public sector work. They added that reports that an immigration reform proposal that includes severe limits on skilled construction workers would make it hard for recovering firms to find enough skilled workers.

“Between the dismantling of skills-based, vocational, education programs, the aging of the current workforce and years of bad economic news that have discouraged potential entrants from considering careers in construction, the pool of available skilled workers is relatively small,” said Stephen E. Sandherr, the association’s chief executive officer.

“This industry could go from having too little work to having too few workers. Thus, it is critical for comprehensive immigration reform to include reasonable options to recruit temporary guest workers when domestic sources are exhausted.”

 

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Construction Jobs Rise For 10th Month In A Row To 3-year High

 

Construction industry employment climbed for the 10th consecutive month in March, as the sector added 18,000 jobs and surpassed 5.8M employees for the first time since September 2009, according to an analysis of new government data by the Associated General Contractors of America.

Association officials cautioned that the industry may soon experience both layoffs for some skilled trades and shortages of others, unless policy makers boost infrastructure investment and allow importation of needed workers.

“The nearly steady expansion of construction payrolls since hitting bottom in January 2011 brought the industry’s unemployment rate down to 14.7% last month, the lowest March rate since 2008,” said Ken Simonson, the association’s chief economist.

“Unfortunately, the decline is less a result of the 370,000 construction hires than because more than a million and a half experienced workers have left the industry since its peak by taking other jobs, retiring or leaving the workforce. That makes shortages of skilled workers increasingly likely in high-demand crafts such as pipefitting, welding and some residential activities.”

The 5.802M construction workers employed in March constituted an increase of 162,000 or 2.9% from a year ago and included many, but not all, nonresidential segments as well as residential construction, Simonson noted.

Residential building and specialty trade contractors added 14,800 workers in the month and 77,800 (3.8%) over 12 months. Nonresidential building and specialty trade contractors, along with heavy and civil engineering construction firms, boosted employment by 3,000 in March and 84,400 (2.3%) since March 2012.

“In contrast to the broad gains in most construction segments, employment in public works construction has been flat or falling,” Simonson pointed out. These counts, which lag the overall industry totals by one month, show a drop of 3,500 employees (1.5%) in highway, street and bridge construction from February 2012 to February 2013 and a pickup of only 1,000 (0.7%) in water and sewer system construction.

At the other extreme, Simonson said, oil and gas pipeline construction employment soared by 16,300 (14.5%) and power and communication system construction employment jumped by 14,400 (13%).

Association officials said that these diverging employment patterns mean it is essential for the industry to be able to recruit workers from abroad if necessary to fill gaps in critical segments. It is equally important that the public sector stop underinvesting in vital highway and water infrastructure, they said.

“Construction is now adding jobs at a faster clip than the economy as a whole, but there are twin threats to both the industry and overall economic expansion,” said Stephen E. Sandherr, the association’s chief executive officer, “To keep the economy on track, the nation needs up-to-date infrastructure that can deliver energy, goods and people. Policy makers need to do their part by investing in public infrastructure and by allowing construction to import workers when needed.”

 

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Construction Spending Rebounds in February With Private, Public Gains

 

Construction spending rebounded in February with gains from depressed January levels in residential, private non-residential and public investment, according to an analysis of new Census Bureau data by the Associated General Contractors of America.

Association officials cautioned that the rise in public investment was likely to be short-lived and urged policy makers in Washington to make infrastructure investment a priority.

“It is encouraging to see growth in both monthly and year-over-year totals in private residential and nonresidential construction spending,” said Ken Simonson, the association’s chief economist. “There are increasing signs that 2013 will be a good year for a wide variety of project types.”

Construction put in place totaled $885B in February, up 1.2% from the downwardly revised January level. The February 2013 total was 7.9% higher than in February 2012. Private residential construction jumped 2.2% for the month and 20% year-over-year. Private nonresidential spending rose 0.4% for the month and 6.1% year-over-year.

Public construction spending increased 0.9% for the month but slipped 1.5% over 12 months.

“There is little doubt that construction of new houses and apartments will continue to boom in the next several months, based on data covering recent housing starts and building permits, as well as reports of rising rents, occupancy rates and new-home sales in many markets,” Simonson said. “On the nonresidential side, there should be a lot of activity involving pipelines, manufacturing, railroads and trucking, and warehouses.”

New single-family construction rose 4.3% from January’s level and 34% from a year ago. New multi-family construction fell 2.2% for the month but was 52% above the February 2012 mark.

The largest private nonresidential category, power construction — which includes oil and gas fields and pipelines as well as power plants, alternative energy and transmission lines— increased 0.7% for the month and 4.0% over 12 months.

Manufacturing construction rose 0.3% and 9.9%, respectively. Private transportation construction slumped 2.4% in February but climbed 17% year-over-year. Warehouse construction soared 8.3% and 19%. New and remodeled private office construction rose 0.3% and 25%.

Association officials said federal infrastructure investment has been plunging even as several states have passed funding increases for projects. Federal investment in construction dropped 1.1% in February and 10% from a year ago, while state and local investment rose 1.1% for the month and was nearly level — down 0.5% — year-over-year. They urged the federal government to fund vitally needed investments in infrastructure projects.

“The nation has been underinvesting in infrastructure for years,” said Stephen E. Sandherr, the association’s chief executive officer. “With funding set through September, it is time for Washington to work on finding adequate funding in the next budget.”

 

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Construction Employment Increases in 34 States as Contractors Find Work in More Parts of the Country

 

 

Construction employment expanded in two-thirds of all states in January as the industry showed signs of emerging from a 6-year slump, according to an analysis by the Associated General Contractors of America of Labor Department data.

Association officials cautioned, however, that the industry’s recovery remains fragile and that current and looming federal budget cuts threaten to drag down construction employment in numerous states.

“These results show that contractors are finding work in more parts of the country than they have for many months,” said Ken Simonson, the association’s chief economist. “Further gains appear likely but could be derailed if lawmakers continue to make indiscriminate cuts to key construction and infrastructure programs.”

From January 2012 to January 2013, 24 states and the District of Columbia added construction jobs, 25 shed workers and one — Wisconsin — had no change.

D.C. jumped to the top ranking for percentage of new construction jobs (9.4%, 1,200 jobs); followed by North Dakota (9.0%, 2,500 jobs); Hawaii (8.0%, 2,300 jobs); Alaska (7.2%, 1,200 jobs) and Washington (6.0%, 8,200 jobs). Texas (28,500 jobs, 5.0%) added the most new construction jobs over the past 12 months, followed by California (17,600 jobs, 3.0%) and Washington.

Arizona ranked No. 9, adding 5,200 construction jobs, a 4.5% increase for that period. In January, Arizona added 1,500 construction jobs, a 1.3% increase over December 2012.

Among states losing construction jobs during the past year, Arkansas lost the highest percentage (-10.5%, -5,100 jobs), followed by Rhode Island (-8.0%, -1,300 jobs); Montana (-7.2%, -1,700 jobs) and South Dakota (-6.4%, -1,400 jobs). Illinois lost the most jobs (-9,800 jobs, -5.0%); followed by Virginia (-7,500 jobs, -4.2%); Ohio (-5,200 jobs, -2.8%) and Arkansas.

Simonson noted that 34 states and D.C. added construction jobs between December and January, while employment slipped in 14 states and held steady in two states. Wyoming had the largest percentage increase (4.6%, 1,000 jobs); followed by New York (4.2%, 13,000 jobs). New York added the largest number of jobs, by far — probably reflecting recovery work from Hurricane Sandy.

Alaska and South Dakota had no change in construction employment over the month, while 14 states lost jobs, with Arkansas having the steepest percentage drop (-5.0%, -2,300 jobs); followed by Kansas (-4.0%, -2,200 jobs). Arkansas lost the largest number of jobs for the month; followed by Kansas and Pennsylvania (-2,200 jobs, -1.0%).

“Construction spending has been rising for two full years but contractors have been cautious about adding workers until they knew the upturn would last,” Simonson explained. “In 2013, both residential and private nonresidential construction should rise enough to offset a further slowdown in public work, and contractors will be looking for more workers.”

Association officials said the cuts in federal funding for construction triggered both by the so-called sequestration that took effect earlier this month and by spending bills now advancing in Congress would fall hardest on construction employers in states that have a large federal government presence. They urged lawmakers to address out-of-control entitlement spending instead of making disproportionate cuts to funding for essential infrastructure and military projects.

“Canceling construction investments will ultimately worsen the deficit by undermining the nation’s growth and competitiveness,” said Stephen E. Sandherr, the association’s chief executive officer. “Meanwhile, the burden falls unfairly on states that host large military facilities, as well as states with extensive federal lands, research and energy installations.”

 

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Construction Employment Increases As Growing Private Sector Demand Boosts Industry

 

Construction employment increased in 139 out of 337 metro areas between December 2011 and December 2012, declined in 131 and was stagnant in 65, according to a new analysis of federal employment data released by the Associated General Contractors of America.

Association officials noted that growing private sector demand for new construction projects boosted employment in a slight plurality of metro areas.

“Private sector demand for energy, health care, higher education and residential construction is having a positive impact in a growing number of metro areas,” said Ken Simonson, the association’s chief economist. “Unfortunately, construction employment in almost as many metro areas appears to be suffering from declining public sector demand and a private sector market that is still well-below peak levels.”

Pascagoula, Miss. added the highest percentage of new construction jobs (42%, 1,900 jobs) followed by Haverhill-North Andover-Amesbury, Mass.-N.H. (22%, 800 jobs); Lafayette, La. (17%, 1,100 jobs) and Omaha-Council Bluffs, Neb.-Iowa (16%, 3,000 jobs).

Houston-Sugar Land-Baytown, Texas (17,600 jobs, 10%) added the most jobs. Other areas adding a large number of jobs included Dallas-Plano-Irving, Texas (8,300 jobs, 8%); Seattle-Bellevue-Everett, Wash. (7,800 jobs, 12%); Boston-Cambridge-Quincy, Mass. (5,900 jobs, 12%) and Los Angeles-Long Beach-Glendale, Calif. (5,700 jobs, 5%).

The largest job losses were in Atlanta-Sandy Springs-Marietta, Ga. (-4,900 jobs, -5 %); followed by Portland-Vancouver-Hillsboro, Ore.-Wash. (-3,600 jobs, -7%); Tampa-St. Petersburg-Clearwater, Fla. (-3,500 jobs, -7%) and Northern Virginia (-3,200 jobs, -5%).

Jackson, Miss. (-20%, -2,000 jobs) lost the highest percentage. Other areas experiencing large percentage declines in construction employment included Columbus, Ind. (-19%, -300 jobs); Springfield, Mass.-Conn. (-18%, -1,400 jobs) and Danville, Ill. (-13%, -100 jobs).

Association officials noted that construction employment is benefitting from growing demand for construction, driven primarily by the private sector. They added that the rebounding housing market and relatively strong demand for healthcare, energy and higher education facilities boosted construction spending levels by more than 7% for the year through November. But they cautioned that construction spending was still more than $300B below peak levels amid declining public sector activity and weaker demand for office, retail and lodging.

“Contractors in some areas appear confident enough about market conditions to begin adding staff,” said Stephen E. Sandherr, the association’s chief executive officer. “The question is whether private sector demand will continue to grow in 2013 or stall as it has done in prior years.”

 

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Construction Employment Increases in 33 States Amid Growing Sense of Optimism

 

Construction employment expanded in two-thirds of all states in December and in half the nation last year as the industry showed signs of emerging from a six-year slump, according to an analysis by the Associated General Contractors of America of Labor Department data.

Association officials noted that contractors responding to a recent survey expect to add more workers in 2013.

“These results show that contractors are finding work in more parts of the country than they have for many months,” said Ken Simonson, the association’s chief economist. “Further gains appear likely but could be derailed if lawmakers do not keep debt markets operating normally.”

For 2012 as a whole, 24 states and the District of Columbia added construction jobs, 24 shed workers and two — Vermont and West Virginia — had no change. Nebraska jumped to the top ranking for percentage of new construction jobs (10.1%, 4,100 jobs); followed by D.C. (7.3%, 900 jobs); Texas (6.6%, 36,800 jobs); Hawaii (6.5%, 1,800 jobs) and Washington (6.5%, 9,000 jobs).

Texas added the most new construction jobs over the past 12 months, followed by California (24,500 jobs, 4.4%), Washington and Arizona.

Among states losing construction jobs during the past year, Rhode Island lost the highest percentage (-6.7%, -1,100 jobs), followed by Delaware (-5.8%, -1,100 jobs); Mississippi (-5.6%, -2,700 jobs) and Arkansas (-5.6%, -2,600 jobs).

Illinois lost the most jobs (-8,600 jobs, -4.5%); followed by Pennsylvania (-7,700 jobs, -3.4%) and Florida (-16,800 jobs, -2.1%).

Simonson noted that 33 states and D.C. added construction jobs between November and December, while employment slipped in 16 states and held steady in Utah. Wisconsin had the largest percentage increase (5.8%, 4,900 jobs); followed by D.C. (3.9%, 500 jobs) and New Jersey (3.6%, 4,300 jobs).

Utah had no change in construction employment over the month, while 16 states lost jobs, with Rhode Island having the steepest percentage drop (-5.6%, -900 jobs); followed by Montana (-4.1%, 1,000 jobs) and Minnesota (-3.6%, 3,500 jobs). Texas lost the largest number of jobs for the month (-4,100 jobs, -0.7%); followed by Florida (-3.500 jobs, -1.1%) and Minnesota.

“Construction spending has been rising for two full years but contractors have been cautious about adding workers until they knew the upturn would last,” Simonson explained. “In 2013, both residential and private nonresidential construction should rise enough to offset a further slowdown in public work, and contractors will be looking for more workers.”

Association officials said the monthly construction employment gains were consistent with results of its recently released 2013 Construction Hiring and Business Outlook, where 31% of firms reported plans to add new workers this year compared to only 9% that plan to make layoffs, a net positive reading of 22%. Officials cautioned that construction firms still face significant headwinds, noting that most firms expect public construction activity to continue to decline and remain cautious about plans to acquire new equipment.

“There is a growing sense of optimism within the construction community that the worst is over,” said Stephen E. Sandherr, the association’s chief executive officer. “At the same time, however, just because the worst is over doesn’t guarantee that conditions are going to get significantly better anytime soon, especially if Washington can’t find a way to address out-of-control entitlement spending that is making it increasingly difficult to invest in aging infrastructure and other important construction programs.”

 

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Construction Material Prices Down Slightly Between Nov. and Dec.; Up For the Year

 

Prices for construction materials inched down in December, closing out a year of relatively subdued changes in both materials costs and bid prices, according to an analysis of new federal figures released today by the Associated General Contractors of America.

Association officials said the price decline was likely to be temporary, noting that the vast majority of contractors predict materials prices will rise in 2013.

“Moderate price swings for several materials last year gave contractors some breathing room, but future price spikes could push many firms into the red,” said Ken Simonson, chief economist for the construction trade association. “Contractors still have not recovered from the cost increases they had to absorb in 2010 and 2011.”

For the 12 months ending in December, the producer price index for all construction inputs rose 1.3%, similar to what contractors are estimated to charge for new nonresidential buildings, Simonson noted. The index for new school buildings rose 1.1%; new industrial and office construction, 1.4%; and new warehouses, 2.6%.

Materials costs rose more than 5% in both 2010 and 2011, while bid prices were virtually unchanged in 2010 and rose between 2.9 and 4.8% in 2011, depending on building type, Simonson added.

The construction economist attributed the mild annual materials price increase to moderation in fuel, metals and paving prices, which offset steeper jumps in several materials used in residential building.

The index for steel mill products fell 7.9% in 2012 after leaping more than 12% in both 2010 and 2011. The index for aluminum mill shapes decreased 1.6%, while copper and brass mill shapes increased 1%. Diesel prices climbed 1.8%, the smallest amount since 2008. The indexes for concrete products rose 2.4% and asphalt paving mixtures and blocks, 4.4%.

In contrast, the index for gypsum products soared 14%, which Simonson said reflected the demand from new apartment and home construction, along with renovations of office and retail space. Other building products with substantial price increases included lumber and plywood, 10.8%; architectural coatings, such as paint, 10.1%; insulation materials, 5.1%; and plastic construction products, 4.7%.

Association officials noted that 90% of contractors surveyed for the group’s 2013 Construction Hiring and Business Outlook predict materials prices will increase in 2013. They added that an increasing number of contractors will try to pass on some of those price increases to customers this year, noting that 29% report they will try to raise bid prices this year, compared to only 15% that raised prices in 2012.

“The days of low bids and relatively inexpensive construction costs are clearly numbered,” said Stephen E. Sandherr, the association’s chief executive officer. “While the construction industry is still facing some difficult headwinds, there is a clear sense that the industry is slowly turning a corner.”

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2013 Outlook For Construction Improves as More Firms Plan to Hire

 

Significantly more construction firms are planning to add new staff than plan to cut staff while demand for many types of private sector construction projects should increase this year according to survey results released by the Associated General Contractors of America and Computer Guidance Corporation.

The survey, conducted as part of Tentative Signs of a Recovery: The 2013 Construction Industry Hiring and Business Outlook, provides a generally optimistic outlook for the year even as firms worry about rising costs and declining public sector demand for construction.

“While the outlook for the construction industry appears to be heading in the right direction for 2013, many firms are still grappling with significant economic headwinds,” said Stephen E. Sandherr, the association’s chief executive officer. “With luck and a lot of work, the hard-hit construction industry should be larger, healthier, more technologically savvy and more profitable by the end of 2013 than it is today.”

Sandherr noted that significantly more firms are planning to add staff this year compared to the number of firms expecting to make layoffs. He said that 31% of firms plan to add staff this year, while just 9% plan to make layoffs this year.

The scope of those staff additions are likely to be modest, however, with 79% of firms reporting they plan to hire 15 or fewer people in 2013 and only 13% planning to hire more than 25 new workers this year.

Among the 30 states with large enough survey sample sizes, 56% of firms in Maryland plan to hire new staff this year, more than in any other state. Just 14% of firms in South Carolina plan to add staff this year, the least amount in any state.

Meanwhile, 37% of firms in Michigan plan layoffs for this year, the highest percentage of any state. No firms working in Maryland reported plans to make layoffs this year.

Contractors appear increasingly optimistic that demand for certain private sector projects will expand this year, Sandherr noted. Firms are most optimistic about the outlook for hospital and higher education construction, he said, noting that 36% of firms predict the amount of money spent on those projects will grow in 2013 while 39% of firms expect the market will remain stable compared to last year.

Contractors were also optimistic about the markets for power construction, but had lower expectations for manufacturing; private office and retail, warehouse and lodging construction.

Meanwhile, contractors expect demand for many types of public construction will decline in 2013. For example, 40% of contractors report they expect demand for public buildings to shrink in 2013 while just 18% expect that market to grow. Another 37% of contractors report they expect demand for K-12 school construction to shrink while just 20% expect it to increase. And 35% of contractors expect the market for manufacturing facilities to shrink this year, while just 23% predict it will expand.

A significant – but smaller than last year – number of contractors report that customers’ projects have been delayed or cancelled because of tight credit conditions. Forty percent of responding firms report that tighter lending conditions have forced their customers to delay or cancel construction projects. Just 3% of firms reported having an easier time getting credit while 41 percent report no change in credit conditions.

“Unfortunately, there are almost as many causes for concern as there are signs of optimism,” said Ken Simonson, the association’s chief economist. “Demand for public buildings is set to decline, manufacturing work appears to be slackening, materials prices and health care costs continue to rise and many firms are reluctant to make major investments in new equipment.”

Simonson noted that overall demand for new construction equipment is likely to remain modest in 2013. Sixty-four percent of firms plan to purchase new equipment this year, down from 70% last year, while 77% of firms plan to lease this year compared to 78% in 2012.

Contractors are increasingly relying on leasing equipment to avoid having to pay for idle equipment during lags in construction activity, the economist noted. Even as they shift toward more leasing, firms’ appetite for new equipment remains modest, with two-thirds of the firms planning to buy and 73% planning to lease $250,000 or less in equipment this year.

Contractors also report being squeezed by rising costs for health insurance and construction materials. Seventy-five percent of firms reported paying more for health care coverage in 2012 and 77% expect to pay even more in 2013. Meanwhile, 88% of firms reported paying more for construction materials last year while 90 percent expect to pay more for their supplies this year.

However, contractors are increasingly optimistic about their ability to raise bid levels. Twenty-eight percent of firms expect to increase the amount they charge for construction this year, nearly double the 15 percent of firms that increased prices in 2012.

An increasing number of construction firms – 38% in 2012 compared to 35% in 2011 – report using Building Information Modeling services, association officials noted. And 43% report they expect the use of BIM to increase in 2013.

In addition, more firms report working on public private partnerships, which leverage private-sector dollars to finance public projects. Thirty-seven percent of firms report being involved in these kinds of projects in 2012 and 97% expect demand for these kinds of privately financed projects to increase or remain stable in 2013.

“The survey indicates that construction companies will continue to make investments in their IT infrastructure, specifically in areas such as enterprise content management, mobile field applications and solutions that support self-service functions,” said Roger D. Kirk, CEO, Computer Guidance Corporation.

Kirk noted that 60% of firms report they plan to invest in their information technology departments in 2013. He added that 73% of those firms report they expect to invest over $10,000 in new information technology this year. However, a relatively small percentage of firms – 11% – report they plan to purchase new financial and job cost software in 2013, Kirk added. Similarly, only 9% of firms plan to lease or finance the purchase of new financial and job cost software in 2013.

The outlook, which the association co-sponsored with Computer Guidance, was based on survey results from more than 1,300 construction firms from 49 states, the District of Columbia and Puerto Rico. Contractors from every segment of the industry answered over 30 questions about their hiring, equipment purchasing and business plans. Economists and specialists from the association and Computer Guidance analyzed those comments to craft the outlook.

 

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Construction Sector Adds 30,000 Jobs as Unemployment Rate Falls to 13.5%

 

Construction employers added 30,000 jobs in December as the industry’s unemployment rate hit 13.5%, according to an analysis of new federal data released by the Associated General Contractors of America.

Association officials noted that the monthly increase was the largest in nearly two years, driven primarily by increases in private sector demand for construction.

“Resurgent demand for new housing construction and modest growth in private commercial construction are helping create some new construction jobs,” said Ken Simonson, the association’s chief economist. “Now that the threat of the fiscal cliff has been – temporarily – relieved, construction employment should continue to slowly rise in 2013.”

Construction firms employed 5.564M people in December, up from 5.534M in November, Simonson noted, an increase of 0.5%. However, the sector’s overall employment in December was only 18,000, or 0.3%, higher than one year earlier when firms employed 5.546M workers.

The industry unemployment rate fell from 16% a year earlier, indicating that formerly unemployed construction workers are leaving the industry at a faster rate than they are being rehired.

Both residential and nonresidential construction added jobs in December, with residential construction outpacing nonresidential construction for the month. Residential construction added 18,100 jobs in December, with residential building contractors adding 5,800 employees and residential specialty contractors adding 12,300 new workers. Residential construction employment is now up by 29,800, or 1.5%, compared to 12 months ago.

Nonresidential contractors added 11,900 jobs (0.3%) in December, but are down by 12,400 jobs (-0.4%) compared to one year ago. Nonresidential specialty trade contractors added 5,600 jobs for the month, while nonresidential building contractors added another 7,000 jobs. However, heavy and civil engineering construction firms lost 700 jobs during the month, dragged down by continuing cutbacks in government infrastructure spending.

Association officials said the growth in construction employment was likely restrained by uncertainties about what federal tax and spending levels would be in 2013 as Washington officials worked to address the pending fiscal cliff. They noted that the stopgap measure passed early in January would do little to resolve broader fiscal problems that are making it increasingly difficult for the federal government to invest in vital infrastructure projects.

“Until Washington can address the broader challenge of out-of-control entitlement spending we are going to see more political standoffs like the fiscal cliff and fewer investments in infrastructure,” said Stephen E. Sandherr, the association’s chief executive officer. “Congress and the administration need to focus their energy on addressing the fiscal imbalances that are the root cause of these recurring political crises.”