Category Archives: Construction

CR: Construction Spending increased in February

Construction Spending increased in February

by Bill McBride on 4/01/2013 

Catching up …

The Census Bureau reported that overall construction spending increased in February:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during February 2013 was estimated at a seasonally adjusted annual rate of $885.1 billion, 1.2 percent above the revised January estimate of $874.8 billion. The February figure is 7.9 percent above the February 2012 estimate of $820.7 billion.

Both private construction and public construction spending increased:

Spending on private construction was at a seasonally adjusted annual rate of $613.0 billion, 1.3 percent above the revised January estimate of $605.2 billion. Residential construction was at a seasonally adjusted annual rate of $303.4 billion in February, 2.2 percent above the revised January estimate of $296.9 billion. …

February, the estimated seasonally adjusted annual rate of public construction spending was $272.1 billion, 0.9 percent above the revised January estimate of $269.6 billion.

Private Construction Spending Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential spending is 55% below the peak in early 2006, and up 36% from the post-bubble low. Non-residential spending is 25% below the peak in January 2008, and up about 37% from the recent low.

Public construction spending is now 16% below the peak in March 2009 and just above the lowest level since 2006 (not inflation adjusted).

Private Construction SpendingThe second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is now up 20%. Non-residential spending is up 6% year-over-year mostly due to energy spending (power and electric). Public spending is down 1.5% year-over-year.

A few key themes:
1) Private residential construction is usually the largest category for construction spending, but there was a huge collapse in spending following the housing bubble (as expected).  Private residential is now about even with private non-residential, and residential will probably be the largest category of construction spending in 2013.  Usually private residential construction leads the economy, so this is a good sign going forward.

2) Private non-residential construction spending usually lags the economy.  There was some increase this time, mostly related to energy and power – but the key sectors of office, retail and hotels are still at very low levels.

3) Public construction spending has declined to 2006 levels (not adjusted for inflation).  This has been a drag on the economy for 4 years.


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Eye on Housing: JOLTS: Rising Job Openings in Construction

JOLTS: Rising Job Openings in Construction

by Robert Dietz Eye on Housing

Recent government employment data suggest a pickup in construction sector job openings over the last half year. While consistent with the uptick in construction sector activity, particularly in home building, the data reflect only modest increases in employment thus far.

For the construction sector, Job Openings and Labor Turnover Survey (JOLTS) data from the Bureau of Labor Statistics (BLS) indicate that hiring levels continue to be strong enough to create net jobs (hiring minus separations). Hiring in construction totaled 319,000 in January 2013. Hiring for the sector has exceed 300,000 per month for 22 of the last 24 months.

const labor mkt_mar13

The number of open positions in the construction industry remained relatively high in the current report. At 98,000 open positions, the month of January had the second highest number of unfilled positions in the last 17 months. Successfully filling open positions with qualified workers is a top concern for home builders in 2013.

Measured as a three-month moving average, the openings rate (the blue line above) has been reflecting strength for the last six months. Combined with a declining sector layoff rate (nonseasonally adjusted), charted as a 12-month moving average in the graph above, these factors suggest good news for construction hiring in the months ahead.

Monthly employment data for February 2013 (the employment count data from the BLS establishment survey are published one month ahead of the JOLTS data) indicate that total employment in home building stands at 2.109 million, broken down as 578,000 builders and 1.531 million residential specialty trade contractors.

res const employment_mar13

According to the BLS data, over the last 12 months, the home building sector has added only 64,000 jobs. Since the point of peak decline of home building employment, when total job losses for the industry stood at 1.466 million, 125,000 positions have been added to the residential construction sector.

An outstanding puzzle remains the fact that the increase in building has outpaced employment growth for the industry. This could be due to increased hours for existing workers, but if true, it is not a sustainable situation. Expected increases in building should lead to significant growth in home building employment in 2013.

For the economy as a whole, the December JOLTS data indicate that the hiring rate remained at 3.1% of total employment. The hiring rate has been in the 3.1% to 3.4% range since January 2011. The job openings rate was also relatively unchanged at a rate of 2.7% in January. The openings rate has now been in the 2.5% to 2.7% range for more than one year.

labor market_mar13

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