Real (net of inflation) gross domestic product (GDP) increased 3.2% in the first quarter at a seasonally adjusted annual rate, a slowdown from the 5.6% gain in the fourth quarter of 2009, the Bureau of Economic Analysis reported today. Investment in structures was a major drag on GDP growth. Real investment in private nonresidential structures (including mineshafts and wells) decreased 14%, after dropping 18% in the fourth quarter. Real residential fixed investment decreased 11%, in contrast to an increase of 3.8%. Real government investment in structures dropped 16%, following a decline of 14%. Prices remained subdued for GDP and finished structures. The price indexes for GDP and private nonresidential structures each rose just 0.9%; for residential investment, 1.3%; and for government structures, 1.0%. The Federal Reserve's Federal Open Market Committee had noted at the conclusion of its meeting on Wednesday, "Business spending on equipment and software has risen significantly; however, investment in nonresidential structures is declining."

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The producer price index (PPI) for finished goods jumped 1.1% from February to March, not seasonally adjusted (0.7%, seasonally adjusted), and 6.0% over 12 months, the Bureau of Labor Statistics (BLS) reported on April 22. The PPI for inputs to construction industries, a weighted average of materials used in every type of construction, plus items consumed by contractors such as diesel fuel, rose 1.3% and 4.8%. By segment, the increases were: highway and street construction, 1.6% and 8.5%; other heavy construction, 1.6% and 5.3%; nonresidential buildings, 1.3% and 4.4%; multi-unit residential, 1.0% and 3.0%; and single-unit residential, 1.0% and 2.8%. The increases were driven by jumps in the PPIs for several materials: diesel fuel, 8.9% and 62%; steel mill products, 3.4% and 11.3%; lumber and plywood, 2.2% and 14%; and plastic construction products, 1.4% and 2.7%. Gypsum products rose 1.0% for the month but were still down 9.1% from a year before. Conversely, two PPIs fell for the month but jumped from a year ago: copper and brass mill shapes, -3.3% and 47%; and aluminum mill shapes, -1.5% and 13%. The materials price rise worsened the squeeze on contractors, which continued cutting prices for finished buildings and subcontracting work: new warehouse construction, -0.2% and -5.7%; industrial buildings, -0.5% and -5.3%; offices, -0.3% and -4.8%; schools, 0 and -2.2%. The PPIs for new and remodeling nonresidential building work by electrical contractors fell 0.3% and 3.5%; roofing, -0.4% and -1.9%; concrete, +0.4% and -1.9%; and plumbing, -0.3% and +0.5%.

CONTRACTORS' GROUP DETAILS MEASURES TO IMPROVE ENVIRONMENTAL PERFORMANCE OF NATION'S BUILDINGS & INFRASTRUCTURE

Green Construction Plan Will Protect the Environment, Boost Hard-Hit Industry as New Figures Show 310 Out of 337 Metro Areas Lost Construction Jobs Between March 2009 and 2010

The nation's buildings and infrastructure will become more efficient, significantly reducing greenhouse gas emissions and cutting energy consumption, according to a new green construction plan released today by the Associated General Contractors of America.  The plan outlines measures designed to stimulate demand for green construction projects, boost infrastructure capacity, and improve building efficiency and green construction practices.

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Construction employment expanded in 26 states and the District of Columbia between February and March 2010, fell in 22 and was unchanged in Montana and Rhode Island, the Bureau of Labor Statistics (BLS) reported on Friday. Many states with gains may have experienced rebounds from unusually harsh February weather that delayed project starts and hiring. March employment levels exceeded January totals in 16 states plus D.C. Compared to March 2009, employment shrank everywhere except in Arkansas (up 300 jobs or 0.6%) and North Dakota (up 100 jobs or 0.5%). The largest year-over-year percentage losses were in Nevada, 30%; Colorado and Arizona, 20% each; Washington, 18%; and Idaho, 17%. The national average was -11%.

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MARYLAND ADDS 5,200 CONSTRUCTION JOBS AS SECTOR EMPLOYMENT INCREASES IN 26 STATES, DC FROM FEBRUARY TO MARCH 2010

Industry's Challenges Remain Severe as Arkansas & North Dakota Are Only States to Add Construction Jobs between March 2009 and 2010, As California Lost Nearly 108,500 Jobs

Construction employment expanded in 26 states and the District of Columbia between February and March 2010, yet only Arkansas and North Dakota have more construction workers than they did a year ago according to a new analysis of federal employment figures released today by the Associated General Contractors of America.  The new figures, while offering room for optimism, underscore how far the industry is from a recovery, association officials said. (more…)

Several positive indicators for construction have popped up in the past few weeks. The most prominent of these shoots is the employment report for March, which showed construction added 15,000 jobs, seasonally adjusted-the first increase in two years. Surprisingly, the gain was entirely in nonresidential construction (+25,000), while residential construction, which has been performing better in recent months, slipped (-10,000).

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Prices for numerous construction materials have risen recently. The national average retail price of on-highway diesel fuel hit a 17-month high of $3.07 per gallon today, up 84 cents (38%) from a year ago, the Energy Information Administration reported. The agency "projected annual average retail diesel fuel prices…at $2.95 and $3.12 per gallon in 2010 and 2011, respectively" in its April 6 Short-Term Energy and Summer Fuels Outlook. The New Mexico Department of Transportation announced on Tuesday that its liquid asphalt rack-price index for May would be $659, the fourth monthly increase in a row and $116 (21%) higher than in May 2009. A N.M.-based contractor on April 5 sent AGC a list of April price increases ranging from 2% to 15% that it had received from a variety of plastic, copper and brass plumbing suppliers. Purchasing managers at nonmanufacturing firms in March reported price increases for copper fittings and products; diesel fuel; drywall/gypsum board; metal studs; roofing shingles; steel pipe fittings and products but lower prices for construction labor, the Institute for Supply Management said on April 5.

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ONLY TEN METRO AREAS ADD CONSTRUCTION JOBS BETWEEN FEBRUARY 2009 AND 2010 AS INDUSTRY COPES WITH NEW REGS, SPENDING CUTS

Houston, Texas Loses Largest Number of Construction Jobs, Monroe, MI Loses Highest Percent, While Eau Claire, WI Adds the Most Construction Jobs Nationwide During the Past 12 Months

Only 10 out of 337 metropolitan areas added construction jobs between February 2009 and 2010, the Associated General Contractors of America reported today citing data from the U.S. Bureau of Labor Statistics.  Even worse, 230 metro areas experienced double digit declines in construction employment while only two cities experienced a double digit increase, association officials noted.

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CONSTRUCTION EMPLOYMENT RISES FOR FIRST TIME SINCE JUNE 2007; UNEMPLOYMENT RATE REMAINS AT DEPRESSION-LIKE 24.9 PERCENT

March Gain May Reflect Rebound from Bad February Weather, Not Lasting Turnaround, Industry Economist Simonson Cautions

Payroll employment in the construction industry in March rose by 15,000, seasonally adjusted, the first gain since June 2007, according to federal employment figures released today. The Associated General Contractors of America hailed the increase but cautioned it may not be sustained.

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Nonfarm payroll employment climbed in March by 162,000, seasonally adjusted, and the unemployment rate remained for a third straight month at 9.7% (10.2%, not seasonally adjusted), the Bureau of Labor Statistics (BLS) reported today. Construction employment rose by 15,000 to 5,592,000, the first gain since June 2007. The increase followed a drop of 59,000 in February, which had unusually severe weather; it will take another month or more of data to determine is the March figure is a turnaround or an anomaly. Nonresidential employment rose by 24,500, following a drop of 46,600, with similar patterns in all three BLS categories: nonresidential building (9,400 in March; -15,900 in February); nonresidential specialty trades (9,400; -19,900); and heavy and civil engineering, (6,000; -15,900). Residential employment decreased in both months (-10,100; -12,200), with similar patterns in both BLS categories: residential building (-800; -6,700) and specialty trades (-9,300; -25,500). Architectural and engineering services employment, an indicator of future demand for construction, dipped by 200 jobs for the month, far milder than the 12-month average of -6,400. The unemployment rate in construction was 24.9% in March, not seasonally adjusted (BLS does not calculate seasonal adjustments for industry unemployment), up from 21.1% in March 2009. Average hourly earnings rose just 1.8%, seasonally adjusted, from March 2009 to March 2010 for all private-sector employees (to $22.47), and 2.1% for construction employees (to $25.27, 12% above the all-private average). Hourly earnings for production or nonsupervisory workers in March averaged $18.90 for the private sector (up 2.1% from March 2009) and $23.18 for construction craft workers (up 2.5%; 23% higher than the private-sector average).

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