Nonfarm payroll employment rose by only 18,000, seasonally adjusted, in June, and the gains for April and May were pared by a combined 44,000, the Bureau of Labor Statistics (BLS) reported today. The unemployment rate edged up from 9.1% in May to 9.2%, seasonally adjusted (9.3%, not seasonally adjusted). Construction employment totaled 5,513,000, seasonally adjusted, down 9,000 from May, up 2,000 from June 2010 and down 2,213,000 (29%) from the peak in April 2006. The unemployment rate for construction workers was 15.6%, not seasonally adjusted, down from 20.1% in June 2010. (BLS does not report seasonally adjusted rates by industry.) The combination of static employment and falling unemployment suggests that discouraged workers are retiring, going back to school or finding jobs in other industries rather than returning to construction—a bad omen for future industry expansion. Results were mixed by category. Heavy and civil engineering construction employment shrank for the second straight month, by 1,800, but was 23,000 (2.8%) higher than in June 2010, perhaps reflecting the recent end or tapering-off of Gulf Coast hurricane protection, military base realignment and stimulus projects. Residential building and specialty trade contractors shed a combined 9,900 jobs in June and 35,000 (1.7%) over 12 months. Nonresidential building and specialty trade contractors added a net 2,700 jobs in June and 14,200 (0.7%) over the year. Architectural and engineering services employment, a harbinger of possible future construction work, rose for the eighth month in a row but by only 200 jobs, putting the June total 22,500 (1.8%) ahead of June 2010. Average hourly earnings in construction matched May’s level of $25.36, up 13 cents (0.5%) over the year.
Apartment and office vacancy rates and rents showed disparate trends in the second quarter. Apartment rents rose in 80 out of 82 markets, with an average increase in effective rent, the amount paid after discounting, up 2.4% from a year earlier, the Wall Street Journal reported on Thursday, citing commercial real-estate researcher Reis Inc. “Rents rose fastest in San Jose, California…..Vacancies, meanwhile, fell in 72 of the 82 markets…to 6%, the lowest since 2008 and compared with 7.8% a year earlier, according to Reis. Vacancies declined fastest in Charleston, West Virginia, Greensboro/Winston-Salem, North Carolina, and Richmond, Virginia….Roughly 8,700 new apartment units opened during the second quarter, the second-lowest quarterly tally for new completions since Reis began collecting data in 1999.” In contrast, the Journal reported on Wednesday, “the amount of occupied office space rose by 3.7 million square feet from April to June, according to [Reis]. While that was the third consecutive quarter in which firms added space, the gains were down from the first quarter, when occupied space rose 5.5 million square feet….Rents, meanwhile, rose an average of 0.2% during the second quarter….Between January 2008 and September 2010, tenants emptied out of 138 million square feet, pushing the vacancy rate from 12.6% to 17.6%, according to Reis. Since October 2010, the amount of occupied space has grown by just 11.9 million square feet….While most major coastal markets have been performing well, some of the cities hardest hit by the recession have yet to see conditions hit bottom. Las Vegas, which has one of the highest vacancy rates in the nation at 24.9%, saw rents paid by tenants fall by 0.3% compared with the prior quarter, according to Reis.”
“In key markets from New Jersey to Silicon Valley, there are signs that supply [of data centers] is catching up with the needs of the telecommunications, Internet and other companies that rent space from data-center landlords,” the Journal reported on Thursday. “In the San Francisco Bay area, rates charged to big tenants who rent entire data centers or large parts of them have fallen some 20% in the past year and a half, amid a burst of new supply, says Tom Ray, chief executive of CoreSite Realty Corp., a data-center landlord with facilities in the area. Other market participants say they haven’t seen a steep decline in Bay area rates, but some are nervous about a new wave of construction expected to hit the market later this year….Many data-center developers, who often break ground before signing up tenants, are continuing to steam full-speed ahead. Their theory: with Internet traffic exploding…and more companies outsourcing their data storage, demand for the space can’t help but increase.”
New orders for U.S. manufactured goods increased 0.8% in May, seasonally adjusted, after dropping 0.9% in April, the Census Bureau reported on Tuesday. For the first five months of 2011 combined, orders were 12.5% higher year-to-date (YTD) than in the same period in 2010. Orders for construction materials and supplies slipped 0.6% in May after rising 0.5% in April and were up 3.6% YTD. Orders for construction machinery fell 4.6% in May but were up 47% YTD.
Construction materials costs are showing divergent patterns. “The sharp increase in energy prices in [the first half of 2011] has prompted aggregate, cement, and concrete producers to push pricing, and it appears that the market (for now) is accepting some pricing,” investment advisor Thompson Research Group (www.thompsonresearchgroup.com) reported on Thursday, in summarizing a survey it conducted. “A reversal from the prior quarterly survey, all categories were seeing price increase acceptance in [the second quarter]. Overall, survey respondents report that price increases right now are not enough to offset higher overall costs.” Purchasing managers at manufacturing firms reported that several items important to construction were up in price in June, the Institute for Supply Management (ISM) reported on July 1: aluminum, plastic products and titanium dioxide; copper and steel were listed as both up and down in price; rubber products were listed as up in price and in short supply. Stainless steel was listed as down in price.
- Industry Priorities
- Education
- News
- Connect
- Benefits
- Events
- Shop