Nonfarm payroll employment in April jumped by 290,000, seasonally adjusted, but the unemployment rate also rose, to 9.9%, as rising job prospects drew more job-seekers, the Bureau of Labor Statistics (BLS) reported on Friday. Construction employment climbed for the second straight month, by 14,000 (0.2%), and the March increase was revised up to 26,000 from an initial estimate of 15,000. Despite the two-month rise, employment in April totaled only 5,625,000, down 554,000 (9.0%) from a year before and 2,100,000 (27%) from the peak in August 2006. In both months, the gains were limited to nonresidential categories, which added 24,600 jobs in April and 36,500 in March: nonresidential specialty contractors (6,200 and 15,500), nonresidential building (9,200 and 12,300), and heavy and civil engineering construction (9,200 and 8,700). In contrast, residential construction fell for the 37th straight month in April (-10,900, following a loss of 10,100 jobs in March), with losses in both residential specialty trades (-6,900 and -10,200) and residential building (-4,000 and +100). The unemployment rate in construction, which is not seasonally adjusted and therefore can be meaningfully compared to previous Aprils but not other months, was 21.8%, the highest April figure since the series began in 1976 and more than double the all-industry rate. BLS estimated that 1,919,000 would-be construction workers were unemployed (not seasonally adjusted). Average hourly earnings in construction fell 6 cents in April to $25.17, seasonally adjusted, and were only 1.6% higher than in April 2009. Architectural and engineering services employment, a precursor to construction, fell by 3,500 (0.3%), seasonally adjusted, about half of the average monthly loss in the past year (-5,800).
Construction spending in March climbed 0.2% to a seasonally adjusted annual rate of $847 billion but remained 12% below the March 2009 level and 30% lower than the peak of March 2006, the Census Bureau reported on May 3. Public construction rose 2.3% for the month but was 6.3% lower than a year ago. Of the two major public segments, highway and street construction rose 1.5% from February but fell 1.4% from March 2009, while public educational construction slumped 2.2% and 17%. The divergent results may reflect the impact of the 2009 Recovery Act ("stimulus"). Highways received $27.5 billion, of which about $6 billion had been paid to contractors as of May 3, according to the Federal Highway Administration, while no funding was set aside for schools or colleges. Transportation facilities (transit, rail, ports and airports), which have received some stimulus funds, with more to come, soared 12% and 32%. Private nonresidential construction sank 0.7% and 26%, with year-over-year declines in every segment except power (-3.8% for the month, +0.6% over 12 months). The next-largest segments were manufacturing, 5.2% and -28%; commercial (retail, warehouse and farm construction), -1.3% and -37%; health care, 3.0% and -16%; and office, -2.8% and -42%. Private residential construction fell 1.1% for the month but rose 1.2% year-over-year, the first 12-month gain since June 2006. New single-family construction rose 2% for the month and 17% year-over-year, while new multifamily fell 6% and 58% and improvements to existing single- and multifamily fell 3% for the month but rose 7% compared to March 2009.
Total compensation (wages plus benefits) rose 0.6%, seasonally adjusted, in the first quarter of 2010 for all civilian workers and 0.4% for workers in construction, BLS reported on April 30. From March 2009 to March 2010, the increases totaled 1.6% and 1.1%, respectively. Wages rose 0.4% and 0.3%, respectively, for the quarter, and 1.5% and 0.8%, respectively, over 12 months. In the most recent example of moderating wage gains, the AGC of St. Louis announced on Friday that it and Cement Masons Local 527 reached a tentative three-year agreement, pending ratification, that includes no increase in 2010 and 2011 and a $1.15-per-hour increase on May 2, 2012.
Property and construction consultant Rider Levett Bucknall on Thursday reported the first quarterly rise in its national construction cost index since the fourth quarter of 2008. "This slight [0.3%], but uneven, rise in construction prices over the last three months reflects recent gains in commodity prices and a marginal increase in builders' and suppliers' overhead and profit levels from their highly competitive rates in 2009," the firm wrote. "However, we believe the current rise in prices is more an indicator that construction prices are stabilizing, rather than a sign that construction costs are gaining sustained upward momentum," said President Julian Anderson.
Orders from U.S. factories (excluding semiconductor manufacturing) rose 1.3%, seasonally adjusted, in both March and February, and 12% year-to-date (YTD) from the first quarter of 2009 to the first quarter of 2010, Census reported on Tuesday. Orders for construction materials and supplies climbed 2.7% in March, 2.4% in February and 3.3% YTD. Orders for construction machinery, which are often volatile, vaulted 28% in March, 4% in February and 75% YTD.
"A significant number of domestic banks, on balance, continued to report having tightened" commercial real estate (CRE) loan standards, the Federal Reserve reported on Tuesday in summarizing the latest quarterly survey of senior loan officers at 56 U.S. banks and 23 foreign bank branches or subsidiaries. "However, this net fraction was considerably smaller than in the January survey. As in the previous survey, domestic banks reported weaker demand for CRE loans, on net. However, in the latest survey, the net fraction of banks reporting weaker demand moved below 10% for the first time since the financial crisis began. In contrast, branches and agencies of foreign banks reported no change in CRE lending standards, on balance, and a small net fraction of these respondents experienced an increase in demand for CRE loans."
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