| Vol. 5, No. 50 |
December 5-12, 2005 |
The Data DIGest
Ken Simonson, Chief Economist, Associated General Contractors of America
Phone: 703-837-5313 · Fax: 703-837-5407 · simonsonk@agc.org
BLS projects construction gains in 2004-14; cement shortages ease but others persist
Real [net of price change] construction output is projected to increase at a rate of 2.2% a year in 2004-2014, according to new projections published last Wednesday by the Bureau of Labor Statistics (BLS) in the November issue of the Monthly Labor Review (www.bls.gov/opub/mlr/mlrhome.htm). “Even though this is slower than the [3.6%] growth rate for the overall economy, it mirrors the expansion posted during the previous 1994-2004 period…The demand for nonresidential structures is the catalyst behind the projected growth in construction keeping pace with its recent history. Stagnating over the last decade, total nonresidential investment is expected to grow by 1.6% [per year] over the 2004-14 period. Propelling this sector’s growth is the delayed replacement and remodeling of industrial plants; the greater demand for aging-population-related nursing, extended care, and high-technology medical treatment facilities; and the need to construct new schools in faster growing regions of the United States.” Residential construction is projected to average 1.8% growth.
The 10-year projections, which BLS updates every other year, show total nonagricultural wage and salary employment growing at an average annual rate of 1.3%, nearly matching the 1.4% growth rate of 1994-2004. But construction industry employment is projected to grow just 1.1% per year, down from a 3.2% rate in the last 10 years. Nevertheless, BLS commented, “the construction sector is also among the economy’s top 10 largest sources of employment growth [in raw numbers].” BLS also projected employment growth by occupation for numerous construction specialties, including workers employed by employers in other sectors. Total employment growth for construction trades and related workers is projected to be 699,000, or 12%, plus an additional 1.1 million openings to replace workers leaving the industry. Among major categories, the highest growth rates were for roofers, 17%; cement masons, concrete finishers, and terrazzo workers, 16%; and plumbers, pipefitters, and steamfitters, also 16%; while the slowest growth is projected for laborers, 6%.
Business activity increased in November in 12 of 17 nonmanufacturing industries surveyed, including construction, the Institute for Supply Management reported on December 5. The purchasing executives who were surveyed reported the following construction-related commodities up in price: asphalt/asphalt products; building materials; cement/cement products; copper products; drywall; freight charges and fuel-related surcharges; lumber products; PVC/PVC products; and roofing materials. Commodities in short supply included building materials and supplies; concrete; construction labor; PVC products; and roofing materials. Diesel fuel was reported as both up and down in price.The Energy Information Administration reported today that the average retail price for diesel rose $.01 this week to $2.44 per gallon, up $.44 (22%) from a year ago.
Cement shortages may be easing for the time being as cold weather brings an end to concrete pouring in many regions. Ed Sullivan, Chief Economist for the Portland Cement Assn (PCA), on Tuesday said that about 15 states were experiencing shortages, down from 32 identified by PCA or AGC in August. Sullivan spoke during an audio conference on the outlook for construction materials, which also featured John Cross, Vice President of the American Institute of Steel Construction, and was hosted by AGC Chief Economist Ken Simonson. (The conference can be accessed for a fee from www.agc.org.) PCA’s projected last month that the U.S. will import 33 million tons of cement in 2005, roughly 27% of the cement consumed and 35 million tons in 2006. Customs data reported last week by the U.S. Geological Survey show imports exceeded 27% of consumption in the first nine months of 2005.
New orders for goods manufactured in the U.S. rose a steep 2.2% in October, adjusted for seasonal and trading-day but not price changes, following a 1.4% drop in September, the Census Bureau reported on Tuesday. Cumulative orders for the first 10 months of 2005 were 7.7% higher than in January-October 2004. Orders for construction machinery jumped 9% in October following a 16% plunge in September. The year-to-date total was up 22%. Orders for construction materials and supplies dipped 0.2% in October, after rising 1.9% in September. The year-to-date total was up 5.9%. The fact that orders for U.S.-made construction materials rose less than overall orders this year despite a strong construction market suggests growing imports.
“A boom is under way in construction of ethanol plants spurred by gas prices but also a government mandate for more production,” the Wall Street Journal reported on Wednesday. “According to the Renewable Fuels Assn., [11] plants were built in 2005. 24 plants and seven major expansions are under development.”
On Friday, BLS released third-quarter estimates for employer costs for employee compensation. Construction industry compensation averaged $28.51 per hour, 17% higher than the private-sector average. Wages differed by only 7%, $18.52 vs. $17.23. But other costs totaled $8.99 per hour for construction, 26% more than the $7.11 all-industry average, mainly because of higher costs for workers compensation ($1.43 vs. $0.49) and contributions to defined benefit retirement plans ($0.92 vs. $0.45).
The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics. All rights reserved.
