Every day in recent weeks, federal and state agencies have announced new projects funded by the American Recovery and Reinvestment Act (ARRA), the "stimulus" bill. The variety, speed and totals are impressive, given that the bill was signed less than three months ago.

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State unemployment rates were nearly all higher in March," the Bureau of Labor Statistics (BLS) reported on April 17, as 46 states recorded over-the-month unemployment rate increases, North Dakota and the District of Columbia registered decreases, and Georgia, New York and Rhode Island had no change. Over the year, jobless rates were up everywhere. In March 2009, nonfarm payroll employment decreased in 48 states and DC and rose slightly in Alaska and Louisiana. Construction employment rose by less than 1% in March in New Jersey, New Hampshire and Vermont, and fell everywhere else. Compared to March 2008, construction employment rose only in Louisiana, by 5%, and fell everywhere else. The largest year-over-year declines were in Arizona, -28%; Connecticut, -22%; Florida, -21%; Vermont, North Carolina and Oregon, -19% each.

Real (net of inflation) gross domestic product (GDP) tumbled 6.1% in the first quarter at a seasonally adjusted annual rate, following a 6.3% decline in the fourth quarter of 2008, the Bureau of Economic Analysis reported today. Real investment in "nonresidential structures decreased 44%, compared with a decrease of 9.4%….Real residential fixed investment decreased 38%, compared with a decrease of 23%." Real investment in government structures shrank 17%, compared to -7.7%. Among major nonresidential types, real investment in commercial and healthcare structures fell 33% and 22%; manufacturing rose 42% and 10.5%; power and communications, -35% and -2%; and other, -32% and -17%. The price index for GDP fell 1.0% and 4.3%. The price index for investment in private nonresidential structures fell for the first time since 2003, dropping 3.4%, after rising 7.4%. The price index for residential investment fell for the fifth straight quarter, dropping 4.8%, compared to -9.4%." The price index for government structures rose 4.4% and 10.3%.

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AGC has compiled tables of PPIs for construction materials and segments as well as analysis. The data is from the Bureau of Labor Statistics monthly report and covers over 50 construction specific data series.

"New construction starts increased 5% in March," seasonally adjusted, McGraw-Hill Construction reported today, based on its own data compilation. However, for the first quarter of 2009 compared to the same months of 2008, total starts tumbled 40%. "The improved level of contracting relative to February was due to a strong increase for public works construction, helped by two large pipeline projects and a large rail project. At the same time, nonresidential building showed a further loss of momentum, and residential building slipped back after its brief upturn in February. Residential building starts fell 8% in March and 52% for the first quarter of 2009 compared to the same months of 2008; nonresidential building, -3% and -47%; and nonbuilding construction rose 27% for the month but fell 11% for the quarter.

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"Today's producer price index report from the Bureau of Labor Statistics shows that the price of materials used in highway and street construction has dropped 7 percent over the past year. Materials for other heavy construction are nearly 6 percent cheaper and nonresidential buildings, 2.6 percent less expensive.

"Decreasing economic activity has driven producer prices down by 62 percent for diesel fuel, 37 percent for copper and brass mill shapes, and 15 percent for steel mill products, among other items. In addition, increased competition for a shrinking number of overall construction projects has reportedly led contractors to cut their margins, further adding to lower-than-expected bid prices on public projects.

"The price declines make this a great time for public agencies and private owners alike to start construction projects, particularly because this ‘limited-time sale' may not last much longer. Copper and diesel prices have recently moved up, and steel markets are sending mixed signals. Agencies with federal stimulus funds for construction should put them to work promptly," said Ken Simonson, chief economist for the Associated General Contractors of America.

The value of nonresidential building starts plunged 23% in March, while civil works starts jumped 15%, Reed Construction Data reported on Thursday, based on data it compiled. Comparing the first quarters of 2009 and 2008, building starts fell 8% in value but 18% in square footage. The value of the largest building category, schools/colleges, was unchanged, but retail fell -16%, hospitals/clinics, -1%; and office, -25%. Civil works rose 28% in value, with gains of 2% for roads/highways, 11% for water/sewage, 96% for miscellaneous (including power projects), and even larger jumps for the small airport and dams/marine categories.

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Nonfarm payroll employment continued to decline sharply in March (-663,000, seasonally adjusted), bringing the 12-month decline to 4.8 million (-3.5%), the Bureau of Labor Statistics (BLS) reported on Friday.  The unemployment rate rose to 9.0%, not seasonally adjusted (8.5%, seasonally adjusted), from 5.2% a year ago. Construction remained in the vanguard, with job losses of 126,000 for the month and 928,000 (-12.5%) over 12 months. The 12-month decrease amounted to nearly one-fifth of all nonfarm job losses, although construction accounted for just one out of 20 jobs. The unemployment rate in construction, 21.1% in March, was the highest of any industry, and the 9-point increase (from 12.0% in March 2008) was the largest jump. Nevertheless, average hourly earnings in construction continued to outpace the overall economy, rising to $22.61 in March, seasonally adjusted, a gain of $1.03 (4.8%) over 12 months, compared to a rise of 3.4% for all private nonfarm production and nonsupervisory employees. Architectural and engineering services employment, a harbinger of demand for future construction, rose 0.2% in March but was down 2.2% over 12 months.

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"Today's dismal employment report provides a dire reminder of the unprecedented economic challenges facing millions of construction workers nationwide. The Bureau of Labor Statistics reported that the industry lost 126,000 jobs in March, seasonally adjusted, and 928,000 jobs over the past 12 months. Even though construction accounts for only 5 percent of the workforce, construction layoffs now account for almost 20 percent of total job losses this past year. With construction unemployment at 21.1 percent, not seasonally adjusted, compared to 9 percent (8.5 percent seasonally adjusted) for the entire nonfarm economy, the industry suffers the dubious distinction of having the highest unemployment rate of any sector. Indeed, this year alone the construction unemployment rate has shot up a shocking 9.1 percent. These grim figures underscore the urgent need to turn stimulus announcements into contract awards. Getting as much work started as quickly as possible is the best way to get unemployed construction workers back on the job," said Ken Simonson, chief economist for the Associated General Contractors.

It is growing more likely that real (inflation-adjusted) gross domestic product (GDP) will rise slightly in the quarter that began on April 1 from the dismal levels of the first quarter. The growth is likely to pick up gradually through the rest of the year. But it will be very uneven, unlike the downturn, which affected all sectors.

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