Nonfarm payroll employment in October increased by 261,000, seasonally adjusted, from September and by 2,004,000 (1.4%) year-over-year (y/y), the Bureau of Labor Statistics (BLS) reported today. The unemployment rate fell to 4.1% from 4.2% in September. Construction employment increased by 11,000 for the month and 187,000 (2.8%) y/y. The October total, 6,930,000, was the largest since October 2008. Average hourly earnings in construction increased 2.3% y/y to $29.06, or 9.5% higher than the average for all private-sector employees ($26.53, a rise of 2.4% y/y). The unemployment rate in construction, not seasonally adjusted, was 4.5%, the lowest October rate since 2000, and the number of unemployed jobseekers with construction experience was 418,000, the lowest October total since 2000. (Not-seasonally-adjusted employment may be affected by normal weather and holiday patterns and thus should not be compared to levels in other months.) Employment in architectural and engineering services increased by 3.5% y/y, a positive sign for future construction.
Construction employment, not seasonally adjusted, rose from September 2016 to September 2017 in 250 (70%) of the 358 metro areas (including divisions of larger metros) for which BLS provides construction employment data, fell in 56 (16%) and was unchanged in 52, according to an AGC release and map on Tuesday. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employers.) The largest gains again occurred in Riverside-San Bernardino-Ontario, Calif. (16,200 construction jobs, 17%), followed by Las Vegas-Henderson-Paradise (10,100 construction jobs, 18%) and Portland-Vancouver-Hillsboro, Ore.-Wash. (9,100 construction jobs, 14%). The largest percentage gains occurred in Wenatchee, Wash. (19%, 500 combined jobs), followed by Lake Charles, La. (18%, 4,000 construction jobs) and Las Vegas-Henderson-Paradise. The largest job losses again were in Houston-The Woodlands-Sugar Land (-11,000 construction jobs, -5%), followed by Columbia, S.C. (-3,700 combined jobs, -22%) and the Kansas City, Mo. division (-3,100 combined jobs, -11%). The largest percentage losses were in Grand Forks, N.D.-Minn. (-23%, -1,100 combined jobs), Columbia S.C., Kansas City, Mo. and Victoria, Texas. (-11%, -500 combined jobs). September employment was a record high for the month in 39 metros (dating back in most areas to September 1990); none set a new September low.
Construction spending totaled $1.220 trillion at a seasonally adjusted annual rate in September, 0.3% higher than in August, and 2.0% higher y/y than the September 2016 rate, the Census Bureau reported on Wednesday. Public construction increased 2.6% for the month but declined 1.6% y/y. Of the three largest public segments, highway and street construction fell 7.4% y/y; educational construction increased 6.0%; and transportation (transit, passenger rail, ports and airports) slipped 1.0%. Private nonresidential spending slid 0.8% from August and 3.8% y/y. Of the four largest components, power (electric power plus oil and gas pipelines and field structures) tumbled 9.1% y/y; commercial (retail, warehouse and farm) added 12%; office declined 7.4% and manufacturing slumped 21%. Private residential spending in September was flat for the month and up 10% y/y. New multifamily construction ticked up 0.9% y/y; new single-family construction rose 12%; and residential improvements climbed 10%. Regarding possible impacts from Hurricanes Irma (in September) and Harvey (in August), a Census official told AGC, "Anecdotally, we didn't see a significant effect from the hurricanes, especially on large projects."
On Tuesday, BLS released the employment cost index, a measure of compensation (wages, salaries and benefits, including required payments), for the third quarter of 2017 (2017Q3). In the private sector as a whole, compensation increased 0.8%, seasonally adjusted, from June to September (up from 0.5% in Q2) and 2.5% from September 2016 to September 2017 (up from 2.3% the year before). Compensation for all employees in the construction industry increased 0.5% in Q3 (vs.0.4% in Q2) and 2.7% over 12 months (vs. 1.9% in the prior 12 months). Compensation for private-sector employees in construction, extraction, farming, fishing and forestry occupations (mainly construction trades) increased 0.7% in Q3 and 3.0% from 2016Q3 to 2017Q3, up from 2.2% in the previous four quarters. Wages and salaries for these occupations increased 0.8% in Q3 and 3.3% over four quarters (vs. 2.5% over the prior year). Wages and salaries for all construction-industry employees increased 0.6% in Q3 and 3.0% over four quarters (vs. 2.0% over the prior year). The y/y changes in compensation and wages for the construction industry and trades were the largest since 2008 and are consistent with the widespread reports of tight labor markets.
On Thursday, the Bureau of Economic Analysis released tables showing, gross output and value added by industry for 2017 Q2 and revisions for earlier quarters. Gross output (total sales, including sales to other construction firms) in construction totaled $1.46 trillion at a seasonally adjusted annual rate (4.4% of the all-industry total), down $21 billion (1.4%) from Q1. Value added (sales to final users) in construction totaled $819 billion (4.3% of gross domestic product), up $3.4 billion (0.4%) from Q1.
The homeownership rate in Q3 was 63.8% of households, seasonally adjusted, close to the rates in Q2 (63.9%) and Q1 (63.7%) but up from 63.4% in 2016Q3, the Census Bureau reported on Tuesday. A continuing increase in the homeownership rate is likely to reduce demand for multifamily rental construction.