Seasonally adjusted construction employment in July increased in 26 states, dropped in 23 states plus D.C., and was unchanged in Alaska, the Bureau of Labor Statistics (BLS) reported today. Over the past 12 months, six states added construction jobs (Kansas, 6.9%, 500 jobs; New Hampshire, 5.0%, 1,100 jobs; Oklahoma, 2.8%, 1,900 jobs; West Virginia, 2.4%, 800 jobs; Alaska, 1.9%, 300 jobs; and Arkansas, 1.5%, 800 jobs). Nebraska had no change, while 43 states plus D.C. lost construction jobs, led by Nevada (-22%, -17,300 jobs).

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The value of nonresidential construction starts in July dropped 9% compared with July 2009, Reed Construction Data reported on Thursday. Year-to-date starts for the first seven months of 2010 combined rose 8% from January-July 2009. Nonresidential building construction declined 14% July-to-July but rose 5% year-to-date, while heavy construction fell 1% and rose 12%, respectively. "Starts were about steady again in July [compared with June] as they have been for most of the year, allowing for the usual seasonal variation," Chief Economist Jim Haughey said. "Heavy starts were the highest in six months with a surge in highway and bridge projects in the first month of the new fiscal year for most states….There were sizable July gains for developer-financed retail, hotel and warehouse (but not office) projects, which signals that this cyclically sensitive sector may be recovering. However, institutional building starts declined in July. Federal stimulus funds cannot offset the collapse of state and local government finances."

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Nonfarm payroll employment fell by 131,000, seasonally adjusted, in July, "reflecting the departure of 143,000 temporary Census 2010 workers from federal government payrolls," the Bureau of Labor Statistics (BLS) reported on Friday. Total private-sector employment rose by 71,000. "Thus far this year, private sector employment has increased by 630,000, with about two-thirds of the gain occurring in March and April," BLS stated. The job loss in June was revised to 221,000 from the initial estimate of 125,000. The unemployment rate in July was 9.7%, not seasonally adjusted (9.5%, seasonally adjusted, matching the June rate). Construction employment dropped by 11,000, seasonally adjusted, to 5,573,000, a 14-year low. BLS said, "10,000 construction workers were off payrolls due to strike activity," which has now ended. Construction job losses have moderated: the decrease from July 2009 to July 2010, 6.3% or 376,000 jobs, was only about one-third as large as a year ago. Among the five BLS construction categories, residential building contractors had the most severe losses, -1.7% for the month and -8.9% over 12 months; followed by residential specialty trades, -0.5% and -4.3%; nonresidential building, -0.3% and -5.4%; heavy and civil engineering, -0.1% and -3.6%; and nonresidential specialty trade contractors, +0.4% and -8.4%. The unemployment rate in construction fell to 17.3%, unadjusted, in July 2010, from 18.2% in July 2009, as the number of unemployed construction workers dropped to 1,528,000 from 1,687,000. Given the drop in employment over that span, the decrease in unemployment reflects workers who have left construction for other industries or have stopped looking for work in the past 12 months, not net hiring. Average hourly earnings in construction rose 4 cents in July to $25.19, seasonally adjusted, and 33 cents (1.3%) compared with July 2009. Architectural and engineering services employment, a harbinger of future demand for construction, edged up by 0.1% in July but fell 2.6% over 12 months.

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"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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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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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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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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New construction starts in May climbed 3% from the previous month, McGraw-Hill Construction (MHC) reported on Tuesday, based on data it collected. "Nonresidential building showed improvement after weak activity in April, and residential building edged upward. However, nonbuilding construction retreated in May, following April's elevated amount of new public works and electric utility projects. For the first five months of 2010, total construction starts on an unadjusted basis [was] down 2% from the same period a year ago….'The recent pattern of construction starts indicates that activity has stabilized at a low level, with ups-and-downs on a monthly basis, but the transition to sustained expansion has yet to occur,' stated Robert A. Murray, vice president of economic affairs for [MHC]. 'The volume of nonresidential building remains quite low, and is likely to stay that way through 2010. Much of this year's upward movement is expected to come from public works construction, which lost momentum in May after earlier gains.'…The 2% decline for total construction starts on an unadjusted basis during the first five months of 2010 was the result of varied behavior by sector. Residential building climbed 30%, with the comparison to the early months of 2009 when the improvement for single-family housing was just beginning to take hold. Nonbuilding construction year-to-date decreased 8%, with public works down 4% while electric utilities fell 28%. Nonresidential building year-to-date dropped 16%, due to this performance by major segment: commercial building, down 32%; manufacturing building, down 63%; and institutional building, down 4%."

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The producer price index (PPI) for finished goods rose 0.3% in May, not seasonally adjusted (but fell 0.3%, seasonally adjusted) and 5.3% over 12 months, the Bureau of Labor Statistics (BLS) reported on Wednesday. The PPI for inputs to construction, a weighted average of all materials used by every type of construction plus items consumed by contractors, such as diesel fuel, increased 0.7% and 5.9%. Despite the higher input costs, contractors continued to bid work at lower prices than a year ago. PPIs for four completed building types were little changed for month but lower than a year earlier: new schools, -0.2% for the month and -1.6% year-over-year; industrial buildings, 0.3% and -3.7%; offices, 0.1% and -3.9%; and warehouses, 0 and -4.6%. The PPIs for subcontractors' prices for nonresidential new and repair work showed a similar squeeze: plumbing contractors, 0.3% in May and 1.3% year-over-year; concrete, 0 and -1.5%; electrical, 0 and -1.8%; and roofing, 0.1% and 2.0%. PPIs for materials showed a wide range of changes. There were increases in May for steel mill products, 3.5% for the month and 32% year-over-year; lumber and plywood, 3.2% and 24%; and gypsum products, 3.1% and -2.7%. there were decreases in May, after months of large increases, for copper and brass mill shapes, -6.8% and 20%; diesel fuel, -1.8% and 42%; and aluminum mill shapes, -0.4% and 16%.

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"Economic activity continued to improve since the last report across all 12 Federal Reserve Districts, although many Districts described the pace of growth as ‘modest,'" the Fed reported Wednesday in the latest Beige Book, a summary of informal soundings of business conditions conducted from mid-April to May 28. The districts are referred to by their headquarters cities. "Higher residential construction increased demand for construction equipment and materials in the Philadelphia, Richmond, Chicago, Dallas, and San Francisco Districts. Residential real estate activity improved since the last report. Most Districts noted an increase in home sales and construction prior to the April 30th deadline for the homebuyer tax credit, with contacts in many of these Districts also indicating a corresponding slowing in activity in May. Tight credit, the elevated inventory of homes available for sale, and the "shadow inventory" of foreclosed properties on banks' balance sheets held back residential development in the New York, Cleveland, Atlanta, and Chicago Districts. Commercial real estate activity generally remained weak. Office, industrial, and retail vacancy rates continued to drift upward in many Districts putting downward pressure on rents. However, lower rents were said to have led to an increase in leasing activity in New York, Philadelphia, Richmond, Kansas City, Dallas, and San Francisco. The elevated inventory of existing properties for sale or rent continued to weigh on new private nonresidential construction. However, stronger industrial demand was noted in several Districts. Public construction increased in Philadelphia, Cleveland, and Chicago, but slowed in Minneapolis….real estate lending increased even though standards on these loans remained tighter than on other loans, particularly for commercial mortgages. Chicago noted that the secondary market for residential mortgages was beginning to improve, and private equity investment in commercial properties increased in Boston, Chicago, and Dallas….Steel prices in many Districts moved higher, as did lumber…but diesel fuel cost pressures eased in New York."

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