Plumbing Industry News

Construction jobs shrink in May, April construction spending rises

Nonfarm payroll employment increased by 69,000 (0.1%) in May, seasonally adjusted, and by 1,782,000 (1.4%) over the past 12 months, the Bureau of Labor Statistics reported June 1. The unemployment rate was 7.9%, not seasonally adjusted (8.2%, seasonally adjusted), compared with 8.7% in May 2011.

Construction employment in May dropped for the fourth straight month, by 28,000 (0.1%) - the largest monthly decline in two years - to 5,516,000, seasonally adjusted. The decrease left employment at the lowest seasonally adjusted level since August and only 18,000 (0.3%) higher than in May 2011. The unemployment rate for former construction workers was 14.2%, not seasonally adjusted, down from 16.3% in May 2011 and 20.1% in May 2010 but still the highest of any industry and more than 6 percentage points above the all-industry rate. (BLS does not seasonally adjust unemployment rates by industry.)

Over the past two years, construction employment was virtually unchanged but the number of unemployed hardhats fell by 605,000, suggesting workers are quitting construction, either to take jobs elsewhere, return to school, retire or otherwise leave the workforce.

Rise in April construction spending

Construction spending in April totaled $821 billion at a seasonally adjusted annual rate, up 0.3% from the upwardly revised March total and up 6.8% from April 2011, the Census Bureau reported June 1. Private nonresidential spending dipped 0.2% in April but jumped 17% year-over-year. Private residential spending was up 2.8% for the month and 7.5% over 12 months.

Public construction spending fell for the fifth straight month, by 1.4% for the month and by 3.2% compared with April 2011. The largest private nonresidential segments (listed in descending current order) all had double-digit year-over-year percentage gains: power, including oil and gas (down 1% for the month but up 26% from a year earlier); commercial - retail, warehouse and farm (up 1.1% and 11%, respectively); manufacturing (-4.6% and 27%); private health care (2.6% and 11%); and private office (1.6% and 18%).

Of the three private residential segments, multifamily construction soared 4.1% for the month and 31% over 12 months; single-family construction jumped 1.8% and 13%; and improvements rose 3.7% for the month but fell 0.2% from a year ago. Of the two largest public categories, highway spending rose 0.4% and 3.4%, while educational spending dropped 0.9% and 2.4%.

Metro-area construction employment

Construction employment declined in 157 out of 337 metropolitan areas (including divisions of larger metros) between April 2011 and April 2012, increased in 120 and stayed level in 60, according to an AGC analysis released May 29 of BLS data. (BLS does not seasonally adjust metro data. The agency combines mining and logging with construction in most metros to avoid disclosing information about industries with few employers.) Anchorage, Alaska (-28%, -2,400 construction jobs) lost the highest percentage, followed by Springfield, Mass.-Conn. (-21%, -1,900 combined jobs); Lewiston, Idaho-Wash. (-20%, -200 construction jobs); and Montgomery, Ala. (-20%, -1,300 combined jobs).

The largest job losses were in the Chicago-Joliet-Naperville, Ill. division (-6,500 construction jobs, -6%); Tampa-St. Petersburg-Clearwater, Fla. (-6,200 construction jobs, -12%); St. Louis, Mo.-Ill. (-6,000 combined jobs, -9%); Atlanta-Sandy Springs-Marietta, Ga. (-5,400 construction jobs, -6%); and New Orleans-Metairie-Kenner, La. (-4,600 construction jobs, -14%).

Fargo, N.D.-Minn. added the highest percentage of new construction jobs (27%, 1,600 combined jobs), followed by Bakersfield-Delano, Calif. (24%, 3,300 construction jobs) and Grand Forks, N.D.-Minn. (23%, 500 combined jobs). Indianapolis-Carmel, Ind. added the most jobs (6,100 construction jobs, 16%), followed by Portland-Vancouver-Hillsboro, Ore.-Wash. (4,800 construction jobs, 11%); Seattle-Bellevue-Everett, Wash. (4,400 construction jobs, 7%); and Phoenix-Mesa, Ariz. (4,400 construction jobs, 5%). Click here to view April metro employment numbers.

Occupancy rates improve in 1Q 2012

Occupancy rates improved in the first quarter of 2012, while rents were mixed among five property types tracked across more than 50 metro areas by Dividend Capital Research, the real-estate analysis firm reported May 31. Most property types remained in a “recovery” phase, with negative-to-below-inflation rental growth and less than long-term average occupancy.

However, apartments, full-service hotels and first-tier regional malls approached the “expansion” phase, in which “rents rise rapidly toward new construction levels,” a level already attained by health facilities. Office and apartment rents rose, as did hotel rates per available room, or RevPAR. Retail rents fell and industrial rents held steady.

Close on the heels of a May 16 directive from the Office of Management and Budget that federal agencies should reduce their real estate usage, the Internal Revenue Service May 22 “announced a sweeping office space and rent reduction initiative that over the next two years will close 43 smaller offices and reduce space in many larger facilities….Coupled with space reductions last year, the initiative will slash total IRS office space by more than one million square feet.” The federal initiative will hold down demand for both federal office construction and private space for lease.


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