"Economic activity continued to improve since the last report across all 12 Federal Reserve Districts, although many Districts described the pace of growth as ‘modest,'" the Fed reported Wednesday in the latest Beige Book, a summary of informal soundings of business conditions conducted from mid-April to May 28. The districts are referred to by their headquarters cities. "Higher residential construction increased demand for construction equipment and materials in the Philadelphia, Richmond, Chicago, Dallas, and San Francisco Districts. Residential real estate activity improved since the last report. Most Districts noted an increase in home sales and construction prior to the April 30th deadline for the homebuyer tax credit, with contacts in many of these Districts also indicating a corresponding slowing in activity in May. Tight credit, the elevated inventory of homes available for sale, and the "shadow inventory" of foreclosed properties on banks' balance sheets held back residential development in the New York, Cleveland, Atlanta, and Chicago Districts. Commercial real estate activity generally remained weak. Office, industrial, and retail vacancy rates continued to drift upward in many Districts putting downward pressure on rents. However, lower rents were said to have led to an increase in leasing activity in New York, Philadelphia, Richmond, Kansas City, Dallas, and San Francisco. The elevated inventory of existing properties for sale or rent continued to weigh on new private nonresidential construction. However, stronger industrial demand was noted in several Districts. Public construction increased in Philadelphia, Cleveland, and Chicago, but slowed in Minneapolis....real estate lending increased even though standards on these loans remained tighter than on other loans, particularly for commercial mortgages. Chicago noted that the secondary market for residential mortgages was beginning to improve, and private equity investment in commercial properties increased in Boston, Chicago, and Dallas....Steel prices in many Districts moved higher, as did lumber...but diesel fuel cost pressures eased in New York."
Contractors and owners at AGC's Public/Private Industry Advisory Council meeting on Friday reported mixed levels of construction activity. Most categories of private and state and local government-funded construction remain moribund. However, two leisure-industry owners reported a pickup in spending on hotel and entertainment facilities. Two contractors said data center construction has been strong. One reported several midsized new factories and major retooling in existing auto plants, but not enough to match pre-recession levels of manufacturing activity. The General Services Administration has now awarded more than $4 billion of contracts out of $5.55 billion to be committed under the 2009 Recovery Act, with another $1 billion of awards expected by September 30.
"Lack of availability of credit remains a major obstacle in the way of construction spending," Econoplay.com reported on Friday, citing Jennifer Riskus, manager of economics and research for the American Institute of Architects. "The AIA's monthly billings index came in at 48.4 [in April], the best showing since the last time the index was above 50 (indicating expansion) in January 2008. Raw data from May, still being compiled, indicates that it won't be the expansionary month that some had hoped for - and might even beckon a relapse. ‘We have panelists who say that things continue to improve. They're even starting to hire more people - and projects are coming on line,' Riskus said. ‘But they're still being held back by the limited availability of credit. That's really hurting. Projects that are ready to go can't get financing.'" Econoplay.com also reported that Turner Construction's quarterly measure of building construction costs "shows they continue to drop in the second quarter, but only marginally," according to Turner Vice President Karl Almstead. "Construction costs were down about a half percentage point in the first quarter, and his preliminary (unpublished) second quarter number is down 0.13%, virtually flat."
Construction employment declined by 35,000 in May, seasonally adjusted, offsetting most of the increases the industry experienced in March (27,000) and April (14,000), the Bureau of Labor Statistics (BLS) reported on June 4. All three of the monthly numbers represent very small changes relative to May employment of 5,591,000 workers. The rate of job loss, relative to a year earlier, has declined steadily from peaking at 17.4% in the year ending last September to 8.6% in the 12 months through May. One hopeful sign comes from architectural services employment. This series is not seasonally adjusted and is presented with a one-month delay. The April figure was up by 900 jobs (0.5%), compared to March, the first monthly gain in nearly two years. The construction unemployment rate was 20.1%, not seasonally adjusted, in May, the highest May rate since the series began in 1976 and more than double the all-industry rate. Seasonally adjusted average hourly earnings in construction totaled $25.20, up 1.8% from May 2009.
The hiring rate in construction in April was 6.3 per 100 employees, seasonally adjusted, down from 7.3 in March but up from 5.5 in April 2009, BLS reported on Tuesday. The overall private-industry rate was 3.7 in March and April, 3.5 in April 2009. The rate of total separations in construction fell to 6.2 in April from 6.3 in March and 7.3 in April 2009.
Employer costs for employee compensation averaged $27.73 in March for all private industry and $31.33 (13% more) for construction employers, BLS reported on Wednesday. Construction employers paid $21.67 in wages (vs. $19.58 for all private industry); $2.17 for health (vs. $2.08); $1.84 for social security and Medicare (vs. $1.64); $1.64 for retirement and savings (vs. $0.96); $1.40 for workers compensation (vs. $0.44); and $1.13 for paid leave (vs. $1.88).
- Industry Priorities
- Education
- News
- Connect
- Benefits
- Events
- Shop