There were 278,000 job openings in construction at the end of November, 24% higher than the year-earlier total of 233,000, and the highest November total in the series’ 18-year history, the Bureau of Labor Statistics (BLS) reported on Tuesday in its latest Job Openings and Labor Turnover Survey (JOLTS) release. Contractors hired 282,000 employees in November, not seasonally adjusted, the highest November total in six years but barely more than the number of unfilled jobs at the end of the month. The jump in openings suggests the industry might have hired more workers if they had been available. But the number of unemployed workers with recent construction experience was the lowest November total since that series began in 2000, BLS reported on January 4—an indication of the difficulty contractors are having in finding workers. In the AGC of America-Sage Hiring and Business Outlook Survey, released on January 2, 78% of respondents reported difficulty filling positions.
The value of construction starts, not seasonally adjusted, increased 6.3% from December 2017 to December 2018 but decreased 5.0% for the year as a whole, data provider ConstructConnect reported on Wednesday. The value of residential starts declined 7.3% for the month and 9.5% for the year, with apartment starts down 8.7% and 27%, respectively, and single-family starts -6.6% and +0.6%. The value of nonresidential starts jumped 17% for the month but fell 2.0% for the year, with engineering (civil) up 26% and 8.8%, respectively; commercial, -30% and -11%; institutional, 39% and -2.4%; and the small, often volatile, industrial (manufacturing) segment, 510% and -6.8%. Among engineering segments, roads/highways rose 20% for the year; bridges, 16%; water/sewage, -7%; miscellaneous (power, etc.), 20%; and airports, -43%. Among commercial segments, private office starts fell 3.8% for the year; hotel/motel, -11%; warehouse, -7.3%; and retail/shopping, -20%. Among institutional segments, school/college starts rose 0.9% for the year; hospitals/clinics, -5.1%; and nursing/assisted living, -15%.
On Friday, BLS posted “Nonresidential building construction overhead and profit markups: an update.” The article extends through 2017 a 2014 analysis of the producer price index (PPI) for new nonresidential building construction, which measures the change in what a fixed group of contractors report they would charge to put up a specific set of buildings. “The markup index increased about 8.0% between January 2014 and June 2015 [, then increased only 0.3%] between June 2015 and June 2016. [There was] a sharp 4.1% jump from May to August. By December 2017, the index stood 21.1% above its September 2011 low, but still 6.8% below its May 2007 peak….By late 2016, some PPI survey respondents remarked that they were busy and short-staffed and that they were concerned about having enough workers for the amount of work available; also, they felt comfortable testing higher markups….overall, firms were able to hire more workers and keep their markups at the higher rates….employment and the markup index in nonresidential building construction track each other closely. The correlation coefficient between the two series is 0.96. In December 2017, markups and employment in nonresidential building construction had not yet reached their prerecession peaks….2018 has seen prices for construction materials increasing faster than the PPI for final demand. Whether these increased material costs will mostly be passed on to building owners or included in overhead and profit remains to be seen. Hourly wages for construction workers have been rising faster than the average for all private employees….It remains to be seen if these wage increases will cut into profit, but some respondents to the PPI survey are already remarking that raises for salaried office staff are increasing the amount of overhead they charge.”
READ MORE AGC Data DiGest January 14 2019