In April, seasonally adjusted nonfarm payroll employment decreased in 44 states and the District of Columbia and rose in 6 states, the Bureau of Labor Statistics (BLS) reported on May 22. Compared to April 2008, nonfarm employment decreased in 48 states and increased slightly in North Dakota, 0.6%; D.C., 0.1%; and North Dakota, less than 0.1%. The largest over-the-year percentage decreases occurred in Arizona, -6.9%; Michigan, -6.8%; Nevada, -6.1%; and Oregon, -5.6%. Seasonally adjusted construction employment in April declined in 41 states, rose in six and was unchanged (or within 100 of the March level) in Rhode Island, North Dakota, Delaware and D.C. Compared to April 2008, construction employment rose only in Louisiana (5%), which is finally experiencing major reconstruction following the 2005 hurricanes. The largest percentage losses in construction employment over the year were in Arizona, -28%; Connecticut, -22%; Oregon and Florida, -20% each; Nevada and Tennessee, -19% each.

The outlook for highway construction funding varies considerably by state. The e-newsletter www.stateline.org reported today that lawmakers or governors in Idaho, Massachusetts, Louisiana and Georgia rejected gas tax increases. "The Maine, Tennessee and Texas legislatures [and Michigan] are weighing gas tax increases in the closing days of their sessions….Despite the string of defeats in state capitols, there were some victories for tax proponents" or other funding sources for transportation in Vermont, Colorado, Massachusetts and the Oregon House. "Ohio lawmakers approved a $7.6 billion transportation bill…The North Dakota and Oklahoma legislatures also boosted transportation spending without increasing taxes….Kansas put off action until next year after learning the state needs to raise $18 billion over 10 years." On May 20, the Virginia Department of Transportation released a draft Six Year Improvement Program, to be considered by the Commonwealth Transportation Board next month, that covers fiscal years 2010-15 and totals $7.4 billion, 36% less than the plan approved for fiscal 2008-13 in June 2007. Highway construction would be cut 37%; rail and public transportation, -31%. The Energy Information Administration reported Thursday that gasoline demand in the four weeks through May 22 was 2% lower than in the year-ago period, a pattern that has prevailed for more than a year. Diesel fuel and vehicle sales are down even more. Gasoline and diesel fuel taxes are the principal funding sources for federal and state highway construction funds, supplemented by vehicle sales taxes and registration fees at the state level.

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On May 19, I had the privilege, along with a handful of other members of the National Association for Business Economics, to brief Federal Reserve Chairman Ben Bernanke and Governor Dan Tarullo on the state of the economy. Thanks to the feedback many of the 12,000 subscribers to the Data DIGest have provided to my "Questions of the Week," I was able to report that some of you are now receiving some stimulus contracts and have seen an improvement in the state and local bond market, but no loosening of credit for developer-financed construction projects.

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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.

The producer price index (PPI) for finished goods climbed 0.6% in April, seasonally adjusted, but fell 3.7% since April 2008, the Bureau of Labor Statistics (BLS) reported on May 14. The PPI for inputs to construction industries, a weighted average of PPIs for materials used in every type of construction, slid 0.4% and 3.7%. The PPIs for construction segments all fell: highway and street construction, -0.2% and -9.1%; other heavy construction, -0.3% and -8.2%; nonresidential buildings, -0.2% and -4.3%; multi-unit residential, -0.3% and -2.2%; and single-unit, -0.6% for the month but up 0.4% for the year. PPIs for two inputs jumped for the month but tumbled for the year: diesel fuel, 20.5% and -56%; and copper and brass mill shapes, 19.5% and -25%. Several materials fell in April but still cost more than a year ago: gypsum products, -0.2% and 5.1%; concrete products, -0.3% and 2.8%; plastic construction products, -0.5% and 2.8%; and construction machinery and equipment, -0.5% and 4.4%. Items that dropped over both periods included steel mill products, -6.9% and -25%, and aluminum mill shapes, -0.7% and -25%. BLS also reported small declines for the month but 12-month increases for PPIs for finished new nonresidential buildings and subcontractor types: industrial, -1.0% and 7.1%; warehouses, -0.6% and 6.1%; schools, -0.1% and 11.5%; offices, -0.8% and 6.1%; concrete contractors, 0 and 4.4%; roofing, -0.1% and 12.3%; electrical, -1.5% and 3.3%; and plumbing, -0.3% and 8.5%. These indexes are meant to reflect labor and overhead as well as materials. However, they are based on contractors' estimates for hypothetical projects, not actual bids submitted in a competitive setting. Many public agencies and contractors report those bids have dropped sharply from last summer as general and subcontractors sacrifice profits to win bids.

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The value of new nonresidential construction starts fell 8% from March to April, Reed Construction Data reported on Wednesday, based on its own data collection. Institutional building starts plunged 47% and commercial building starts tumbled 45% from record highs in December, while heavy project starts were off 16%. For the first four months of 2009 compared to the same period in 2008, the value of all starts fell 3.4%, with commercial, -22.7%; institutional, -6.2%; and heavy, +24.5%.

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Construction spending increased 0.3% in March to a seasonally adjusted annual rate of $970 billion, the Census Bureau reported on Monday. The total was down 11% from March 2008. Private residential construction fell 4.1% for the month and 33% from a year earlier, private nonresidential rose 2.7% and 1.2%, and public construction rose 1.1% and 2.6%. The totals probably do not include any spending of federal stimulus funds, which is not likely to show up as construction put in place before May given the steps required, even after an agency announces a project. Although seasonal adjustment removes normal weather-related variation, combined January-March data probably provides a more reliable picture of the trend, especially for smaller components. Among the larger nonresidential segments, educational construction rose 5% in the first quarter relative to the first three months of 2008; manufacturing, 65%; power, 11%; and healthcare, 3%. The Census figures do not break out the subcategory that produced the huge manufacturing gain but other reports suggest it was driven by several huge refinery upgrades and a steel mill. There were decreases for commercial (retail, warehouse and farm), -22%; office, -8%; highway and street, -3%; and lodging, -6%. Among residential segments, new single-family fell 49%; new multi-family, -14%; and improvements, -8.4%.

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"The increase in nonresidential construction spending for March reported today by the Census Bureau is a reminder that construction is often a lagging indicator of economic activity.  Increases in manufacturing construction are being propelled by huge refinery and steel-mill projects that were begun well-before the economic downturn.  These large projects are eclipsing broader negative trends.  However, as they are completed or scaled back in the coming months, we will get a fuller picture of how much nonresidential construction is being adversely affected.

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