Data Digest: States split between construction job gains, losses; June starts leap, say MHC, Reed

Seasonally adjusted nonfarm payroll employment increased in June in 26 states and the District of Columbia and decreased in 24 states, the Bureau of Labor Statistics reported on Friday. Compared with June 2010, employment increased in 40 states and decreased in 10 states plus D.C. Construction employment improved in 25 states between May and June, declined in 22 states plus D.C., and was unchanged in Alaska, Alabama and Oklahoma, an analysis by AGC showed. Construction employment dropped in 27 states from June 2010 to June 2011, increased in 22 states plus D.C., and was unchanged in Nebraska. Over the year, the largest percentage drop was in New Mexico (-10.2%, -4,400 jobs); followed by Nevada (-8.6%, -5,100 jobs); Minnesota (-8.1%, -6,900 jobs); Colorado (-7.8%, -8,900 jobs) and Georgia (-7.1%, -10,600 jobs). The largest percentage gains occurred in North Dakota (17%, 3,600 jobs); Michigan (9.2%, 10,900 jobs); Oklahoma (4.6%, 3,100 jobs); Texas (4.6%, 26,000 jobs); and Illinois (4.5%, 8,900 jobs). New construction starts in June climbed 15% at a seasonally adjusted annual rate, McGraw-Hill Construction (MHC) reported on Friday, based on data it collected. “The gain followed particularly weak activity in May, and helped the pace of contracting during this year’s second quarter stay close to its first quarter level. June featured a substantial increase for the nonbuilding construction sector, led by the start of several large electric utility projects. Nonresidential building also registered improvement in June, while housing edged up slightly. During the first six months of 2011, total construction starts on an unadjusted basis [were] down 7% from the same period a year ago.” Residential building was up 1% for the month but down 10% year-to-date for the first six months combined; nonresidential building, up 11% for the month and down 9% year-to-date; and nonbuilding construction, up 34% and down 1%, respectively. The value of nonresidential starts increased 10.5% from May to June, not seasonally adjusted “(about 14% after seasonal adjustment) and 29% above last June,” Reed Construction Data reported on July 15, based on data it collected. The value year-to-date was up 5.3% from the first six months of 2010. “Commercial starts jumped 68% in June from May when starts typically decline seasonally….Institutional starts dropped 20% in June after a large, random surge in May. Year-to-date starts are up 3.4% from 2010….Heavy construction starts increased 19% in June from May due to several large dam, marine and power projects. Year-to-date heavy starts are up 2% from 2010.” “Federal energy regulators approved a major rule change that they said would lead to more big electricity transmission lines getting built in the U.S.,” the Wall Street Journal reported on Friday. “The new order, adopted Thursday, should particularly benefit wind- and solar-energy projects, which are often located in remote places that are poorly served by existing interstate transmission lines, said Jon Wellinghoff, chairman of the Federal Energy Regulatory Commission….He said developers have talked to him about wanting to build major transmission lines from renewable resources in the Dakotas to consumers in Chicago, as well as from Oklahoma to cities in the Southeast and from Montana to California….Rhone Resch, president of the Solar Energy Industry Association, a trade group, said that [the regulators’] action will help the ‘solar industry overcome a significant hurdle impeding the development of more than 25 gigawatts’ of projects in the pipeline currently.” Transmission lines were a major contributor to the jump in MHC’s reported starts: “June included the start of a massive $1.3 billion transmission line project in Maine, as well as a $710 million transmission line project in New Jersey.” Industrial production (IP) in manufacturing was unchanged in June, seasonally adjusted, after edging up 0.1% in May, and was 3.7% higher than in June 2010, the Federal Reserve reported on June 15. IP for construction supplies rose 0.3% in June, 1.1% in May and 4% year-over-year. Capacity utilization in manufacturing was at 74.4% of capacity for the third month in a row in June, compared with a 1972-2010 average of 79.0%. Without rising IP and high capacity utilization, future demand for manufacturing construction may not strengthen, although spending rose in recent months. A survey of 73 corporate economists released on July 18 by the National Association for Business Economics found increases outnumbered decreases among the respondents as to their firms’ second-quarter changes in sales, profits, selling prices, input prices, capital spending and employment. Of 43 respondents regarding their firms’ expected spending on structures in the next 12 months, 28% reported they expect an increase at their firms vs. 12% who expect a decrease. “Local governments have endured the first back-to-back declines in quarterly property-tax revenue [in] Census Bureau data…stretching back to 1963,” the Journal reported on July 18. “Property taxes bring in more than a quarter of local-government revenue, according to Moody’s Investors Service….But total revenue from property taxes across the U.S. fell 3% in the fourth quarter of 2010 and 1.7% in the first quarter of 2011, compared with a year earlier….That has put a squeeze on already strapped cities, counties and school districts.” The squeeze, which affects funds for school and other local-government construction, appears sure to continue. U.S. house prices rose 0.4% on a seasonally adjusted basis from April to May, according to the Federal Housing Finance Agency’s monthly House Price Index released on Thursday, but the June index was 6.3% below the May 2010 level and 20% below its April 2007 peak.