Real (net of inflation) gross domestic product increased 2.0% in the third quarter of 2010 at a seasonally adjusted annual rate, up from 1.7% in the second quarter, according to the advance estimate today by the Bureau of Economic Analysis. Real investment in private nonresidential structures rose 3.9% after falling for eight straight quarters. Real residential investment slumped 29%, after rising 26% in the second quarter, reflecting the end of the homebuyer tax credit in April. Real government investment in structures rose 8.8%, following a 9.0% second-quarter gain, boosted by federal spending on stimulus projects, military base realignment and Gulf Coast hurricane recovery and preparation. The price indexes for the three types of investment rose at seasonally adjusted annual rates of 2.6% for private nonresidential, -0.5% for residential, and 1.9% for government structures.

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Seasonally adjusted nonfarm payroll employment rose in 16 states and the District of Columbia and declined in 34 states between August and September, the Bureau of Labor Statistics (BLS) reported on Friday. Over the past 12 months, employment increased in 32 states plus D.C. and dropped in 18 states. The unemployment rate fell in September in 23 states plus D.C., climbed in 11 states and was unchanged in 16. Over the year, the rate improved in 29 states plus D.C., worsened in 16 states and remained steady in five. AGC's analysis of the data showed that construction employment increased for the month in 15 states plus D.C., shrank in 31 states and held level in Colorado, Idaho, New Mexico and Vermont. Over the year, construction employment rose in nine states plus D.C., slipped in 40 states and was unchanged in Alaska. The largest 12-month percentage gains in construction employment were in Oklahoma (10%, 6,500 jobs), Kansas (9%, 5,000 jobs) and New Hampshire (8%, 1,800 jobs). The steepest losses were in Nevada (19%, 14,200 jobs), Vermont (14%, 1,900 jobs) and Idaho (12%, 4,000 jobs). BLS does not compute state unemployment rates by industry. Data for D.C. and six states includes logging and mining with construction to avoid disclosure about industries with few firms.

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The producer price index (PPI) for finished goods increased 0.3%, not seasonally adjusted (0.4%, seasonally adjusted), in September and 4.0% over the past 12 months, the Bureau of Labor Statistics (BLS) reported on Thursday. The PPI for inputs to construction, a weighted average of materials used in every type of project plus items consumed by contractors (such as diesel fuel), fell 0.1% for the month but increased 3.8% over 12 months. The year-over-year rise adds to an ongoing squeeze on contractors, as PPIs for finished nonresidential buildings and subcontractors' work, which include overhead and profit, have fallen or have risen less than materials costs. The PPI for new office construction fell 0.2% in September and 0.4% year-over year; warehouses, 0 and -0.3%; industrial buildings, 0 and +0.4%; and schools, -0.1% and 1.0%. For new and repair work on nonresidential buildings, the PPI for roofing contractors was flat for the month and sloped down 2.7% over 12 months; concrete contractors, 0.4% and +0.1%; electrical, -0.2% and +0.1%; and plumbing, 0 and +2.8%. Materials with year-over-year increases included diesel fuel, -1.5% for the month but up 18% from September 2009; steel mill products, 1.2% and 14%; aluminum mill shapes, 2.0% and 7.9%; lumber and plywood, -1.3% and 6.5%; copper and brass mill shapes, 5.1% and 5.9%; and asphalt paving mixtures and blocks, -0.3% and 5.1%. PPIs fell for gypsum products, -2.6% and -2.3%; and concrete products, 0 and -0.8%.

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Construction employment fell by 21,000 (0.4%), seasonally adjusted, in September to 5,604,000, the Bureau of Labor Statistics (BLS) reported on Friday. The industry has added only 19,000 jobs on net since reaching a low in February, whereas the overall private sector has added jobs for nine straight months. Over the past 12 months, the industry has shed 210,000 employees (3.6%). Among the five BLS categories of construction, one only has added jobs in the last year: 8,500 (1.0%) in heavy and civil engineering construction, the segment most helped by stimulus, military base realignment and New Orleans flood-prevention funding. Employment fell in residential building (37,200, 6.1%), nonresidential specialty trade contractors (108,400, 5.1%), residential specialty trade contractors (55,500, 3.5%), and nonresidential building (17,000, 2.4%). Architectural and engineering services employment, a harbinger of future demand for construction, was roughly level for the month and down 1.6% year-over-year. Architectural services employment, closely associated with building construction, fell 6.2% from a year ago (not seasonally adjusted), whereas engineering and drafting services employment, more connected to public works and power construction, was off 0.6% (unadjusted). Average hourly earnings of all employees in construction fell 1 cent, seasonally adjusted, in September to $25.22, just 28 cents (1.1%) higher than in September 2009. For the entire private sector, earnings rose 1.7% over the year to $22.67.

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Construction spending edged up 0.4% in August to $812 billion at a seasonally adjusted annual rate but remained 10% below the August 2009 level, the Census Bureau reported today. The good news was limited to public construction, which climbed 2.5% for the month, although it was down 1.0% year-over-year. Based on categories with increases, the public uptick appeared to result from federal funds for stimulus, military base realignment, and hurricane reconstruction and prevention, although Census does not list individual projects or sources of funds. Stimulus funds appear to have lifted public housing (up 33% from August 2009 to August 2010), sewage and waste disposal (up 19%), water supply construction (up 5.2%) and highway and street construction (up 0.9%). Reconstruction work around New Orleans may have helped conservation spending rise 18%. In contrast, public educational construction, which is almost entirely funded from state and local revenues, slumped 13%. Private nonresidential spending fell 1.4% for the month and 24% year-over-year, with all 11 categories in the Census press release declining from a year earlier, most by double-digit percentages. Private residential spending slipped 0.3% for the month and 1.7% since August 2009. New single-family construction fell 4.2% in August, the fourth straight drop since the homebuyer tax credits expired in April, though spending was 3.9% higher than in August 2009. New multi-family construction slumped 11% for the month and 52% year-over-year. Improvements to existing single- and multi-family rose 5.0% and 4.2%, respectively.

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Seasonally adjusted construction employment rose in August in 25 states and the District of Columbia, dropped in 23 states and remained level in Iowa and Texas, AGC reported on Tuesday, based on new Bureau of Labor Statistics data. Compared with August 2009, construction employment rose in nine states plus D.C., the largest number of locations with a year-to-year gain since October 2008. Construction employment decreased over the 12-month span in 41 states. The largest 12-month percentage increases were in New Hampshire, 10%, 700 jobs; Oklahoma, 9%, 6,300 jobs; Kansas, 8%, 4,600 jobs; and D.C., 4%, 400 jobs. The worst percentage declines were in Nevada, 20%, 14,700 jobs; Vermont, 14%, 1,900 jobs; Idaho, 13%, 4,300 jobs; Colorado, 12%, 15,300 jobs; and Washington, 11%, 17,600 jobs. (Logging and mining are combined with construction data for D.C. and six states to prevent disclosure about industries with few employers.)

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The producer price index (PPI) for finished goods fell 0.1% in August, not seasonally adjusted (but rose 0.4%, seasonally adjusted) and 3.1% over 12 months, the Bureau of Labor Statistics (BLS) reported on Thursday. The PPI for construction inputs rose 0.2%, not seasonally adjusted for the month and 3.6% over 12 months. PPIs for finished buildings were nearly flat over 12 months; thus, contractors were paying more for materials but not passing the cost along. Specifically, the PPI for new school construction fell 0.2% in August but rose 0.9% for the year; industrial building construction, 0 and 0.2%; offices, 0 and -0.5%; and warehouses, -0.1% and -0.6%. Only two materials had large increases for the month: copper and brass mill shapes, 6.5% and 5.0% year-over-year, and diesel fuel, 5.8% and 13%. The PPI for steel mill products fell 3.9% in August but rose 17% over 12 months; asphalt paving mixtures and blocks, -0.6% and 7.9%.

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"Reports from the 12 Federal Reserve Districts suggested continued growth in national economic activity during the reporting period of mid-July through the end of August, but with widespread signs of a deceleration compared with preceding periods," the Fed reported on Wednesday in the latest Beige Book, a summary of informal surveys of firms in each district (identified by its headquarters city). "Recent weakness [in manufacturing] was most notable for construction-related products, according to reports from Cleveland, Richmond, Chicago, Dallas, and San Francisco….Residential construction activity declined in most areas in response to weak demand. Cleveland, St. Louis, and Minneapolis were the exceptions to this pattern of declining activity, with reports from their contacts indicating that residential construction activity improved of late. Inventories of available homes rose in general, although the availability of new homes in Atlanta was held down by the slow pace of new home construction….Demand for commercial, industrial, and retail space generally remained depressed. Vacancy rates stayed at elevated levels in general and rose further in a few Districts, placing substantial downward pressure on rents. Asking rents continued to decline in parts of the New York and Kansas City Districts. High vacancies and negative absorption held nonresidential construction activity to the bare minimum in most Districts. A few Districts reported exceptions to weak conditions. Cleveland noted improved construction activity for industrial use and educational infrastructure; this raised overall activity above year-earlier levels and prompted modest hiring by builders. Chicago reported an increase in inquiries for commercial redevelopment and rising construction activity for public projects, but Richmond reported that state and local governments cut back on construction projects."

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Nonfarm payroll employment in August fell by 54,000, seasonally adjusted, as layoffs of temporary Census workers swamped an increase of 67,000 in private-sector payrolls, the Bureau of Labor Statistics (BLS) reported today. The unemployment rate in August was 9.6% (9.5%, not seasonally adjusted), up slightly from 9.5% in July. "In construction, employment was up by 19,000 in August; however, about half of the increase was due to the return of 10,000 workers to their jobs following a strike in July," BLS Commissioner Keith Hall said in a statement. "On net, construction employment is about unchanged since March." The construction unemployment rate in August was 17.0%, not seasonally adjusted, the highest August rate since BLS began calculating industry rates in 1976 and up from 16.5% a year before. (Unadjusted rates for industries with large seasonal swings, such as construction, should be compared only to the same month in past years, not across months. BLS does not disseminate seasonally adjusted industry rates.) Over the past year, seasonally adjusted construction employment declined by 274,000 (4.7%) with decreases in all five BLS categories: nonresidential specialty trade contractors, 123,700 (5.8%); residential specialty trade contractors, 63,200 (4.0%); residential building, 45,700 (7.4%); nonresidential building, 31,900 (4.5%); and heavy and civil engineering construction, 10,000 (1.2%). Architectural and engineering services employment, a harbinger of future demand for construction, was flat for the month and down 24,400 (1.9%) over 12 months. Average hourly earnings for all workers in construction rose 3 cents to $25.20 in August, seasonally adjusted, and 28 cents (1.1%) from August 2009.

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Construction employment increased in 31 metro areas from July 2009 to July 2010 (not seasonally adjusted), was unchanged in 30, and declined in 276, AGC reported today, based on Bureau of Labor Statistics (BLS) data. (For most areas, BLS combines construction with mining and logging to prevent disclosure of data for industries with few employers.) Slightly more metros showed gains (31 vs. 25) or no change (30 vs. 27) than in the June 2009-June 2010 period. The largest percentage gains were in the Eau Claire, Wisconsin metro (16%, 500 combined jobs) and the Haverhill-North Andover-Amesbury, Massachusetts-New Hampshire division (13%, 500 combined jobs) of the Boston-Cambridge-Quincy New England City and Town Area. The largest number of combined jobs were added in the Calvert-Charles-Prince Georges, Maryland portion (8%, 2,800 jobs) of the Washington-Arlington-Alexandria, District of Columbia-Virginia-Md.-West Virginia metro and the Kansas City, Kansas portion (9%, 1,700 combined jobs) of the Kansas City metro area. The Chicago-Joliet-Naperville division lost more construction jobs (32,900 jobs, 23%) than any other metro area, reflecting a construction strike that has since ended. Flagstaff, Arizona lost the highest percentage (32%, 700 combined jobs), followed by Napa, California (31%, 1,000 combined jobs). Other areas experiencing large declines in the number of construction jobs included Las Vegas (14,800 jobs, 24%) and Houston-Sugar Land-Baytown (14,700 jobs, 8%).

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