Tag Archives: Ken Simonson

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Construction Material Costs Jump For 2nd Month In A Row

 

Price spikes for several key construction materials in September threaten to push contractors out of business, according to an analysis of federal figures released today by the Associated General Contractors of America.

The recent surge comes despite mild year-over-year changes in materials prices overall.

“The latest surge in materials costs may push subcontractors and some general contractors into insolvency, following years of razor-thin margins and shrunken levels of activity,” said Ken Simonson, chief economist for the construction trade association. “Most contractors have no ability to pass on unexpected cost increases.”

The producer price index for inputs to construction — covering materials that go into every type of project, plus items consumed by contractors such as diesel fuel — increased 0.9% in both September and August, while the indexes that reflect what contractors would charge for their work were largely unchanged, the economist noted.

The price increases for materials follow several months of declining prices, so that the year-over-year change in the index for materials was a “deceptively mild 1.7%,” he added.

Simonson cited rising prices for a variety of essential construction materials as responsible for the recent spike. The price index for diesel fuel jumped 5.7% in September, following a leap of 8.7% in August.

Prices for copper and brass mill shapes climbed 3.6% in September. The indexes for aluminum mill shapes and lumber and plywood each rose 1.1% in the latest month, while the price of steel mill products increased 1.0%.

In contrast, the price indexes for finished nonresidential buildings, which measure what contractors estimate they would charge to put up new structures, as well as the indexes for subcontractors’ work, were mixed for the month, Simonson noted.

The index for new industrial buildings decreased 0.2% from August to September, while the index for new school construction slipped 0.1% for the month. The indexes for new office and warehouse construction were unchanged, as were indexes reflecting prices charged by concrete, electrical and plumbing contractors for new, repair and maintenance work on nonresidential buildings.

The index for roofing contractors was the only nonresidential building index to show an increase for the month: 0.3%.

Association officials said inadequate public investment in infrastructure is a major reason contractors are unable to recover costs. “With so few projects to bid on, contractors are offering their services with little or no margin to cover materials costs,” said Stephen E. Sandherr, the association’s chief executive officer, noting that recent Census Bureau data showed a 3.5% drop in public construction spending from August 2011 to August 2012.

“Despite the tepid recover, the construction industry continues to suffer from tight margins and weak demand. That is why federal, state and local agencies must keep funding intact for construction, or they will have even worse problems with unemployment and shuttered businesses.”

 

 

Construction Employment

Construction Employment Declines In 165 Of 337 Metro Areas

Construction employment declined in 165 out of 337 metropolitan areas between July 2011 and July 2012, increased in 123 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 said that the new data comes out as many metro areas continue to struggle with constricting public sector budgets and uneven private sector growth.

“Construction employment is healthy in the handful of areas where private sector demand is on the rebound,” said Ken Simonson, the association’s chief economist. “However, construction employment in most metro areas is suffering from the effects of tepid private sector demand and shrinking public sector construction budgets.”

The largest job losses were in Chicago-Joliet-Naperville, Ill. (-6,500 jobs, -5%); followed by Tampa-St. Petersburg-Clearwater, Fla. (-6,100 jobs, -12%); Nassau-Suffolk, N.Y. (-5,100 jobs, -8%); New Orleans-Metairie-Kenner, La. (-5,000 jobs, -16%) and Virginia Beach-Norfolk-Newport News, Va.-N.C. (-4,400 jobs, -12%). Springfield, Mass.-Conn. (-28%, -3,000 jobs) lost the highest percentage.

Other areas experiencing large percentage declines in construction employment included Anchorage, Alaska (-23%, -2,500 jobs); Detroit-Livonia-Dearborn, Mich. (-17%, -3,600 jobs) and Jackson, Miss. (-16%, -1,800 jobs).

Bakersfield-Delano, Calif., added the highest percentage of new construction jobs (23%, 3,200 jobs) followed by Yuba City, Calif. (18%, 300 jobs); El Centro, Calif. (15%, 200 jobs) and Pascagoula, Miss. (15%, 700 jobs). Los Angeles-Long Beach-Glendale, Calif. (7,700 jobs, 7%) added the most jobs.

Phoenix-Mesa-Glendale added 5,600 jobs, 7%.

Association officials cautioned that the growth in private sector construction activity taking place in some areas could be undermined by the threat of drastic tax increases next year. They urged Congress and the administration to work together to provide tax certainty while addressing chronic funding challenges for key infrastructure programs.

“Construction employment will suffer a significant blow if Washington gridlocks its way to another recession,” said the association’s chief executive officer, Stephen E. Sandherr. “Setting our fiscal house in order in a way that provides employers with predictable tax rates while allowing for needed infrastructure investments will boost employment in construction and many other sectors.”

Construction Employment

Construction Employment Declines In 31 States In Past Year; Arizona Gains 8,200 Jobs

Construction employment declined in 31 states from July 2011 to July 2012 and in 28 states in the past month, according to an analysis by the Associated General Contractors of America of Labor Department data.

Arizona bucked the national trend, adding 8,200 jobs during that period and ranking No. 6 in construction jobs gained. It went from 111,800 jobs in July 2011 to 120,000 in July 2012.

Association officials noted that construction employment decreased in the majority of states as public construction funding continues to shrink, offsetting gains in homebuilding and nonresidential construction.

“Public construction cuts in particular are taking their toll on construction employment in many parts of the country,” said Ken Simonson, the association’s chief economist. “With economic growth remaining sluggish, there is a chance construction employment will begin to slip in even more places.”

The economist said that among states losing construction jobs during the past year, Alaska lost the highest percentage (-15.%, -2,200 jobs), followed by Mississippi (-10.8%, -5,300 jobs) and Arkansas (-10.4%, -4,900 jobs). Florida lost the most jobs (-16,900, -5.2%), followed by Illinois (-9,800, -5%) and Missouri (-9,500 jobs, -9.2%).

Simonson noted that 18 states and the District of Columbia added construction jobs between July 2011 and July 2012, while construction employment remained stagnant for the year in Hawaii. North Dakota added the highest percentage of new construction jobs (16%, 3,800 jobs), followed by D.C. (12.2%, 1,500 jobs) and Nebraska (10%, 4,100 jobs). California added the most new construction jobs over the past 12 months (27,300, 5%), followed by Texas (22,900, 4.1%) and Indiana (9,300, 7.8%).

Arkansas had the steepest percentage decline among states that lost construction jobs for the month (-4.1%, -1,800 jobs), followed by Missouri (-3.8%, -3,700 jobs) and Montana (-3.5%, -900 jobs). The largest number of construction job losses in July occurred in Ohio (-4,300, -2.4%), followed by Missouri and New Jersey (-2,700, -2.2%).

Twenty states plus D.C. added construction jobs between June and July, while construction employment was stagnant for the month in Utah and Alaska. The highest percentage gains for the month occurred in Rhode Island (3.8%%, 600 jobs), followed by Hawaii (2.9%, 800 jobs) and West Virginia (2.6%, 900 jobs). New York added the most jobs during the month (2,700 jobs, 0.9%), followed by Indiana (2,400 jobs, 1.9%) and Oregon (1,200, 1.7%).

Association officials cautioned that construction employment would continue to suffer from the impact of ongoing cuts to public construction budgets. Worse, if economic growth slows as businesses worry about future tax uncertainty, private demand for construction is likely to lag. They urged officials in Washington to act quickly to provide employers with tax certainty and enact long-delayed infrastructure measures for water and other systems.

“The longer Washington waits to act on vital tax and infrastructure measures, the more construction workers will lose their jobs,” said Stephen E. Sandherr, the association’s chief executive officer. “The best way to boost employment and help the economy is to invest in basics like clean water and set predictable tax rates.”

Construction Materials

Construction Materials Prices Post Rare Year-Over-Year Dip In July

The cost of key construction materials dropped for the third consecutive month in July, pushing down year-over-year prices for the first time since 2009, according to an analysis of producer price index figures released today by the Associated General Contractors of America.

However, association officials warned that recent spikes in diesel fuel and steel prices may drive up the cost of construction again, and they urged lawmakers to invest in needed infrastructure projects promptly while prices remain low.

“This price decline may be the last, given the large jumps in diesel fuel and steel prices that have occurred or been announced since the Labor Department collected this producer price data in mid-July,” said Ken Simonson, the association’s chief economist. “If economic growth accelerates, we are likely to see an end to discounted prices for construction activity.”

The producer price index for inputs to construction — covering materials that go into every type of project, plus items consumed by contractors such as diesel fuel — decreased 0.7% in July and 0.6% from a year earlier, Simonson noted. The year-over-year decline was the first since November 2009, he added.

Simonson observed that falling prices for several key construction materials produced the latest monthly and year-to-year decreases. The price index for steel mill products tumbled 2.8% in July and 5.9% from a year ago. The index for diesel fuel fell 0.2% in July and 9.3% over 12 months.

The index for copper and brass mill shapes rose 0.5% for the month, but plunged 16% since July 2011. Aluminum mill products dropped in price by 1.3% over the month and 9.4% over 12 months.

A few materials posted substantial increases for the month and year, Simonson added. The index for gypsum products increased by 1.4% in June and 16% compared with June 2012, while the index for insulation materials climbed by 3.5% and 8.0%, respectively.

The price indexes for finished nonresidential buildings, which measure what contractors estimate they would charge to put up new structures, rose modestly both for the month and year-over-year, Simonson noted. The index for new industrial buildings posted a rise of 0.1% in July and 1.9% over 12 months.

The index for new office construction also rose 0.1% for the month and climbed 2.5% for the year. The index for new school construction was up 0.2% in July and 3.5% from a year ago. The price for new warehouse construction rose 0.5% for the month and 3.5% from June 2012.

Association officials called on Congressional leaders to complete action on long-delayed measures to invest in aging infrastructure like clean water systems. “Delaying infrastructure repairs will punish taxpayers and undermine economic growth,” said Stephen E. Sandherr, the association’s chief executive officer. “Putting off needed rehabilitation and replacement of worn-out structures will only force taxpayers to pay more for the same amount of work.”

Construction Employment

Construction Employment Declines By 1,000 In July As Industry Unemployment Rate Tumbles To 12.3%

Construction employment declined by 1,000 in July even though the industry’s unemployment rate fell to the lowest level since 2008, according to an analysis of new federal data released today by the Associated General Contractors of America.

The sector’s unemployment rate has steadily declined since 2009 as hundreds of thousands of out-of-work construction workers have left the industry seeking other opportunities, the association’s economist cautioned.

“Employment levels in the construction industry have remained relatively stagnant for 2-½ years,” said Ken Simonson, the association’s chief economist. “The declining unemployment rate has more to do with frustrated job seekers leaving the industry than it does any improvement in demand for construction work.”

Industry employment in July was 1,000 lower than in June and only 5,000, or 0.1 percent, higher than one year earlier, the economist noted. There are now 5.5M construction workers employed across the country. Simonson noted, however, that construction employment patterns have varied among different industry segments.

A booming apartment sector and a revival — at least for now — in single-family homebuilding led to monthly and year-over-year gains in residential construction employment, Simonson noted. He added that total residential construction employment increased by 2,700 or 0.1% for the month and 12,400 (0.6%) compared with July 2011 levels.

Nonresidential construction employment was mixed, reflecting gains in highway and private nonresidential activity that were offset by shrinking public investment in schools and other infrastructure, Simonson continued. He said total nonresidential construction employment edged down by 3,800 (-0.1%) from June to July and 6,900 (-0.2%) over 12 months.

Within the nonresidential category, heavy and civil engineering construction firms added 6,200 workers (0.7%) in July and 10,800 (1.3%) since July 2011. In contrast, nonresidential specialty trade contractors shed 9,500 jobs (-0.5%) for the month and 19,200 (-1.0%) over 12 months. Nonresidential building contractors had mixed results, losing 500 employees (-0.1%) in July and adding 1,500 (0.2%) over the year.

The 12.3% unemployment rate for former construction workers was well below the rate in July 2011 (13.6%), 2010 (17.3%) and 2009 (18.2%), Simonson noted. He added that over those three years nearly 700,000 experienced workers have found jobs in other industries, returned to school, retired or otherwise left the workforce.

Association officials noted the industry was continuing to suffer from weak demand caused by slowing private sector growth and declining public sector investments in construction. “As long as the economy remains stagnant, construction employment levels will remain flat,” said Stephen E. Sandherr, the association’s chief executive officer.

Construction Spending

Construction Spending Reaches Highest Level Since December 2009

Construction spending in June rose to a 2-1/2 year high as double-digit percentage increases in private residential and nonresidential construction more than offset an ongoing downturn in public construction, according to an analysis of new federal data released today by the Associated General Contractors of America. Association officials said they expect the disparity between private and public construction is likely to persist and urged policy makers to put more funding into infrastructure projects.

“The June spending gains come on top of upward revisions to May and April totals, reinforcing the notion that private construction is now growing consistently,” said Ken Simonson, the association’s chief economist. “Even more encouraging, the improvement is showing up in a wide range of residential and nonresidential categories.”

Simonson noted that total construction spending gained 0.4% for the month and 7.0% year-over-year. Private nonresidential spending climbed for the fourth consecutive month and was 14% higher than in June 2011. Residential construction increased 1.3% for the month and 12% year-over-year, with new multifamily construction soaring 3.4% and 49%, respectively, and single-family homebuilding up 3.0% and 19%.

The construction economist said that five of the 11 private nonresidential categories in the Census Bureau’s monthly report registered double-digit percentage gains in spending from June 2011 to June 2012: power and energy construction (including oil and gas-related projects), 26%; hotels, 26%; manufacturing and educational, 19% apiece; and transportation (mainly trucking and rail facilities), 17%. There were also 7% year-over-year increases in health care, commercial (retail, warehouse and farm) and office construction.

Public construction spending appears to have stabilized in recent months but the June 2012 total was 3.7% less than a year earlier, Simonson noted. He said only two of the Census Bureau’s 13 public categories posted year-over-year increases.

“Private nonresidential and multifamily construction should continue to grow in the second half of 2012 and beyond,” Simonson predicted. “Single-family homebuilding also should top last year’s figures, although progress may not occur every month. As a result, total construction spending in 2012 will be positive for the year for the first time since 2007 even though public construction will remain in the doldrums.”

Association officials said construction growth will remain unbalanced, however, unless lawmakers enact more funding for essential water, wastewater and other infrastructure projects.

“Although Congress has kept highway spending from falling, other types of infrastructure, including our aging water systems, need attention,” said Stephen E. Sandherr, the association’s chief executive officer. “There is nothing to be gained from letting our infrastructure deteriorate further.”

Construction Employment - Welder

Construction Employment Up In 25 States; Arizona No. 3 On The List

Construction employment increased in just half the states plus the District of Columbia from June 2011 to June 2012, but declined in a slim majority of states in the past month, according to an analysis of Labor Department data by the Associated General Contractors of America.

California added the most new construction jobs over the past 12 months (27,200, 5%), followed by Texas (24,400, 4.4%) and Arizona (11,200, 10.2%).

“The latest state data show again how fragile and fragmentary the construction recovery is,” said Ken Simonson, the association’s chief economist. “Although private sector demand for structures has risen in most states, improvement in single-family homebuilding is spotty and public investment is shrinking.”

Simonson noted that 25 states and D.C. added construction jobs between June 2011 and June 2012, while construction employment fell in 25 states. D.C. added the highest percentage of new construction jobs for the year (17.8%, 2,100 jobs), followed by North Dakota (16.2%, 3,800 jobs) and Montana (14.6%, 3,300 jobs).

The economist said that among states that lost construction jobs during the past year, Alaska lost the highest percentage (-20.5%, -3,200 jobs), followed by Wisconsin (-11.1%, -10,200 jobs) and Mississippi (-9.7%, -4,700 jobs). Florida lost the most jobs (-24,600, -7.4%), followed by New York (-12,500, -4.1%), Wisconsin and Illinois (-9,900, -5.1%).

Less positively, only 18 states plus D.C. added construction jobs between May and June, while construction employment decreased in 27 states and held steady in five. The highest percentage gains for the month occurred in D.C. (7.8%, 1,000 jobs), followed by North Dakota (2.6%, 700 jobs) and Montana (2.4%, 600 jobs). Texas added the most jobs during the month (9,600, 1.7%), followed by California (8,100, 1.4%) and Ohio (3,500, 2%).

South Dakota had the steepest percentage decline among states that lost construction jobs for the month (-5.2%, -1,100 jobs), followed by Arkansas (-3.7%, -1,700 jobs) and Iowa (-3.4%, -2,300 jobs). The largest number of construction job losses in June occurred in Florida (-5,300, -1.7%), followed by Iowa and Massachusetts (-2,100, -2%).

Association officials warned that construction employment was likely to stagnate or shrink in more states if federal and state officials continue to cut investments in public infrastructure and buildings.

“Ongoing cuts to vital infrastructure, school and university investments are hurting the overall economy, our future competitiveness and causing hardship for too many construction workers,” said Stephen E. Sandherr, the association’s chief executive officer. “Budget discipline should not come at the expense of slashing essential investments.”