July headcount edges up after June gains in 3/4 of metros; outlays fall, especially public

Nonfarm payroll employment in July rose by 209,000, seasonally adjusted, from June and by 2,158,000 (1.5%) year-over-year (y/y), the Bureau of Labor Statistics (BLS) reported today. The unemployment rate returned to the May level, 4.3%, after rising to 4.4% in June. Construction employment increased by 6,000 for the month and 191,000 (2.8%) y/y. The July total, 6,899,000, was the largest since October 2008. Average hourly earnings in construction increased 2.4% y/y to $28.90, or 9.6% higher than the average for all private-sector employees ($26.36, a rise of 2.5% y/y). The unemployment rate in construction, not seasonally adjusted, was 4.9%, and the number of unemployed jobseekers with construction experience was 469,000. Both numbers were slightly higher than a year earlier (4.5% and 410,000). (Not-seasonally-adjusted employment may be affected by normal weather and holiday patterns and thus should not be compared to levels in other months.) Contractors are invited to fill out AGC's Workforce Survey, which will provide evidence of whether firms are still looking for workers and having trouble filling positions. Results will be released in four weeks.

 

Construction employment, not seasonally adjusted, rose from June 2016 to June 2017 in 264 (74%) of the 358 metro areas (including divisions of larger metros) for which BLS provides construction employment data, fell in 57 (16%) and was stagnant in 37, according to an AGC release and map on Wednesday. (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. (18,100 construction jobs, 20%), followed by the Los Angeles-Long Beach-Glendale division (10,400 construction jobs, 8%) and Las Vegas-Henderson-Paradise (9,900 construction jobs, 18%). The largest percentage gains occurred in Bloomington, Ill. (63%, 1,900 combined jobs), followed by Lewiston, Idaho-Wash. (29%, 400 construction jobs); Lake Charles, La. (24%, 4,700 construction jobs); and Riverside-San Bernardino-Ontario. The largest job losses again were in Houston-The Woodlands-Sugar Land (-5,200 construction jobs, -2%) and the Middlesex-Monmouth-Ocean, N.J. division (-2,900 combined jobs, -7%), followed by St. Louis, Mo.-Ill. (-2,600 combined jobs, -4%). The largest percentage losses occurred in Grand Forks, N.D.-Minn. (-21%, -1,000 combined jobs), followed by Danville, Ill. (-17%, -100 combined jobs) and Casper, Wyo. (-12%, -400 construction jobs). June employment was a record high for the month in 42 metros (dating back in most areas to June 1990); none set a new June low.

 

Construction spending totaled $1.206 trillion at a seasonally adjusted annual rate in June, 1.3% below the rate for May (which was revised down by $9 billion or 0.7%), the Census Bureau reported on Tuesday. The rate in June was up 1.6% from June 2016 level but was the slowest since September. Public construction plunged 5.4% for the month and 9.5% y/y. All 12 subsegments that Census reports in its press release (many more are on the website) declined from May, as did 11 from June 2016. Of the three largest, highway and street construction fell 8.1% y/y; educational construction slid 7.3%; and transportation (transit, passenger rail, ports and airports) declined 3.9%. Private nonresidential spending rose 0.1% from May and 1.1% y/y. Of the four largest components, power (electric power plus oil and gas pipelines and field structures) fell 5.4% y/y; commercial (retail, warehouse and farm) added 14%; manufacturing slumped 7.7% and office gained 13%. Private residential spending in June dipped 0.2% for the month but gained 9.2% y/y. New multifamily construction ticked up 0.6% y/y; new single-family construction rose 9.0% and residential improvements soared 13% YTD. As usual with its June release, Census issued annual totals by state and by detailed category for the four Census regions and nine regional divisions, for state and local construction and private construction (other than power, communication and railroad, omitted to preserve confidentiality).

 

Despite the current downturn in manufacturing construction, several large plant announcements point to a possible uptick in 2018 or 2019. Today, Toyota and Mazda announced that "they plan to build a $1.6 billion U.S. assembly plant and jointly develop electric vehicle technologies." No location was mentioned. Toyota had also reported in April that it would spend $1.3 billion for renovations to its Georgetown, Ky. Plant. Lockheed Martin announced on Wednesday that "preliminary construction is underway on a new $350 million Lockheed Martin facility that will produce next-generation satellites" near Denver. On July 27, Foxconn Technology Group announced it would spend up to $10 billion on facilities in Wisconsin. News articles cited by the National Association of Manufacturers' Manufacturing Economy Daily list numerous smaller investments.

 

Spending on food store construction has suddenly cooled, decreasing 27% from a seasonally adjusted annual rate of $4.1 billion in January to $3.0 billion in June, Census data show. "A massive build-out by retailers has left the country piled up with grocery shelves as consumers are shifting from big weekly shopping trips to more snacking and to-go meals," the Wall Street Journal reported on Tuesday. "Some grocers have started to retrench...Kroger, the nation's largest traditional supermarket chain,...is reducing its new-store openings this year to 55 from 100, a nearly billion-dollar drop in capital expenditures, and its chief financial officer, Michael Schlotman, recently said that the company expects to continue to invest less in bricks and mortar. Smart & Final plans to build 19 stores this year after opening 37 in 2016. Wal-Mart Stores Inc. plans to build 55 supercenters and smaller-format stores in its 2018 fiscal year, down from the 132 it opened in the 12-month period ending in January."

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