"Economic activity has continued to increase, on balance," since late May, the Federal Reserve reported on Wednesday in the "Beige Book," a compilation of informal soundings of business conditions by the 12 regional Fed banks. Regions are referred to by the banks' headquarters cities. "Commercial real estate markets, especially construction, remained weak….Richmond, Chicago, and Dallas reported that firms in construction-related manufacturing experienced weak demand; construction supplies sales were flat in Kansas City, and Minneapolis reported that a firm in the sector was increasing production….Construction remained limited in several Districts. In the Atlanta District, residential construction activity softened from already weak levels. Homebuilders in the Cleveland District do not expect a turnaround in new home construction any time this year. Builders in the Chicago District are not introducing new inventory without a signed contract on a home. Housing starts were expected to decline for the second half of the year in the Dallas District and to increase slightly over the next three months in the Kansas City District. Commercial and industrial real estate markets continued to struggle in all twelve Districts. Overall, vacancy rates were flat to slightly increased and continued to exert downward pressure on rents. Construction activity remained weak in most Districts. The New York District noted that commercial development remained generally sluggish despite some pickup in office and retail leasing in New York City. Atlanta, Minneapolis, and Dallas reported that construction activity continued to be weak or to decline, and Cleveland reported that the increase in construction from previous reports has begun to diminish. Philadelphia reported that projects funded with federal stimulus support were near completion with no prospects for additional major construction, while Chicago reported that public infrastructure construction picked up. Developers reported difficult credit conditions in the Cleveland, Richmond, St. Louis, and Kansas City Districts, while the Dallas District reported a few developers going out of business. The outlook for commercial and industrial real estate across the Districts ranged from further declines in activity to slow growth."

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CONSTRUCTION JOBS DROP IN 285 OUT OF 337 METRO AREAS BETWEEN JUNE 2009 & 2010 AS STIMULUS CONTINUES TO BE OUTPACED BY WEAK DEMAND 

Chicago and Pascagoula, Mississippi Top Job Loss List, While Prince Georges-Calvert-Charles Counties, Maryland and Hanford-Corcoran, California Top List of Metro Areas Adding Jobs

Construction employment declined in 285 out of 337 metropolitan areas between June 2009 and June 2010 according to a new analysis of federal employment data released today by the Associated General Contractors of America.  The employment figures demonstrate how weak overall demand for construction is outpacing the benefits of the stimulus' $135 billion in construction-related investments, association officials noted.

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The seasonally adjusted unemployment rate decreased from May to June in 39 states and the District of Columbia, rose in five states and remained unchanged in six, the Bureau of Labor Statistics (BLS) reported on Tuesday. Compared to June 2009, 22 states and D.C. had lower rates, 24 had higher rates and four were unchanged. Earlier, BLS had said the national unemployment rate dropped from 9.7% in May to 9.5% in June, the same level as in June 2009. Nonfarm payroll employment increased from May to June in 21 states and D.C., decreased in 27 states and stayed the same in Nebraska and Rhode Island. Compared to June 2009, employment rose in 22 states and D.C. and fell in 29 states. Construction employment increased for the month in 22 states, fell in 26 and remained static in Colorado, D.C. and Montana. Year-over-year construction employment dropped in 44 states plus D.C. and climbed in six states (the largest total since October 2008): Kansas, 7.7%, 4,400 jobs; Alaska, 3.1%, 500 jobs; Arkansas, 2.4%, 1,200 jobs; West Virginia, 2.4%, 800 jobs; New Hampshire, 2.3%, 500 jobs; and North Dakota, 0.5%, 100 jobs. The largest 12-month percentage losses were in Nevada, -2.4% and -19,500 jobs; Vermont, -18.5%, -2,500 jobs; Wyoming, -16.6%, -4,000 jobs; Washington, -14.3%, -22,900 jobs; Idaho, -13.8%, -4,600 jobs; and Colorado, -13.7%, -17,600 jobs. California lost the most jobs over the year, 74,400 (-12.0%). BLS combines mining and logging with construction in six states and D.C. to prevent disclosure of data about industries with few employers. BLS does not calculate industry-specific unemployment rates by state.

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Construction materials costs have retreated after a yearlong advance. The producer price index (PPI) for inputs to construction-a weighted average of the prices of materials used in all types of construction, plus items consumed by contractors, such as diesel fuel-tumbled 0.9 percent, seasonally adjusted, in June. That was the largest one-month drop since February 2009 and followed a run of 10 price increases in the previous 14 months.

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CONSTRUCTION EMPLOYMENT SHOWS SIGNS OF "STABILIZING" AS SIX STATES ADD JOBS BETWEEN JUNE 2009 & 2010; 22 STATES ADD JOBS DURING THE PAST MONTH

Kansas Tops Yearly and Kentucky Tops Monthly Gainers; Nevada and California Experience Most Jobs Losses During Past Year While Wyoming Experiences Largest Monthly Percent Decline

Construction employment edged closer to stabilizing in June, as half the states either added construction jobs or kept the same number as in May, the Associated General Contractors reported in an analysis of federal employment data released today. Compared to June 2009, construction employment rose in six states, the largest number of states to post year-over-year increases since October 2008.

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The producer price index (PPI) for finished goods fell 0.6% in June, not seasonally adjusted (0.5%, seasonally adjusted), and rose 2.8% compared to June 2009, the Bureau of Labor Statistics reported on Thursday. The PPI for inputs to construction industries, a weighted average of prices for materials used in all types of construction plus items consumed by contractors (such as diesel fuel), dropped 0.9% for the month but was 4.2% higher year-over-year. Several key materials had one-month decreases and 12-month increases: copper and brass mill shapes, -6.6% for the month and +13% for the year; diesel fuel, -5.9% and 16%; lumber and plywood, -4.9% and 18%; aluminum mill shapes, -3.7% and 11.5%; steel mill products, -1.3% and 30.5%; and asphalt paving mixtures and blocks, -0.5% and 7.4%. The PPI for concrete products shrank 0.4% and 2.1%. The PPI for gypsum products rose 1.8% for the month and was unchanged from June 2009. General and subcontractors continue to be squeezed by falling bid prices. PPIs for finished nonresidential buildings, which reflect labor costs, overhead and profit as well as materials costs, were generally flat for the month but fell year-over-year by 4.3% for new warehouses, 3.9% for offices, 2.9% for industrial buildings and rose just 0.5% for schools. The PPIs for subcontractors' nonresidential building work fell compared to June 2009 by 2.0% for roofing contractors, 1.3% for concrete contractors and 1.1% for electrical contractors, and rose 2.2% for plumbing contractors.

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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.

Nonfarm payroll employment shrank by 125,000, seasonally adjusted, in June as the end of 225,000 temporary Census jobs swamped modest private-sector gains, the Bureau of Labor Statistics (BLS) reported today. The unemployment rate was 9.6%, not seasonally adjusted (9.5%, seasonally adjusted, down from 9.7% in May). Construction employment fell 22,000, seasonally adjusted, to 5,582,000, the lowest level since August 1996. The unemployment rate in construction was 20.1%, not seasonally adjusted (BLS does not adjust industry rates), the highest for any industry and the highest June rate since the series began in 1976. Of the five BLS construction sectors, only heavy and civil engineering employment increased (by 1,300 jobs or 0.2%), its third rise in four months. The increase may reflect increases in stimulus work, which is concentrated on infrastructure. There were decreases for residential building (-1,500, 0.3%) and specialty trades (-4,600, 0.3%), as well as nonresidential building (-4,300, 0.6%) and specialty trades (-13,000, 0.7%). In a hint that this dichotomy may continue, engineering and drafting services employment increased for the third straight month in May, by 2,300 or 0.3%, not seasonally adjusted, while architectural services employment slipped by 100 or 0.1%. (BLS does not adjust subsectors and issues data with a one-month lag.) Average hourly earnings for all workers in construction were unchanged in June at $25.17, seasonally adjusted, just 1.4% higher than in June 2009.

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View AGC Chief Economist Ken Simonson's presentation on the outlook for construction activity, materials and labor.

CONSTRUCTION EMPLOYMENT FALLS TO 14-YEAR LOW IN JUNE; INDUSTRY UNEMPLOYMENT RATE TOPS 20 PERCENT

 Seasonally adjusted construction industry employment slipped in June to the lowest total since July 1996 while the industry's unemployment rate remained at 20.1 percent, more than double the average for all workers, according to analysis of new federal figures by the Associated General Contractors of America.

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