45 states, D.C. add construction jobs through August; new tariffs hit construction inputs

Seasonally adjusted construction employment rose in 45 states and the District of Columbia year-over-year (y/y) from July 2017 to July 2018, held steady in two states and declined in three states—the smallest number of states with y/y decreases since May 2015—an AGC analysis of Bureau of Labor Statistics data released today showed. The largest increases in construction jobs during the past year again occurred in Texas (56,100 jobs, 7.9%), California (40,400, 5.0%), Florida (39,300, 7.7%), Georgia (18,900, 10%), Arizona (14,900, 10%) and Michigan (14,600, 8.9%). New Hampshire had the highest percentage increase in construction employment during the past year (11%, 3,000 jobs), followed by Nevada (11%, 9,300), Georgia, Arizona, Oregon (9.2%, 8,900) and Michigan. Construction employment set a new high in Massachusetts, New York, Oregon, Texas and Washington. Of the three states that shed construction jobs between July 2017 and July 2018, New Jersey again lost the most and highest percentage (-6,600 jobs, -4.2%), followed by Kentucky (-2,600, -3.4%) and Missouri (-1,000, -0.8%). Construction employment was unchanged over the year in Alaska and Pennsylvania. For the month, employment rose in 33 states, declined in 15 states and D.C., and was flat in Alaska and Delaware. California added the most jobs for the month (5,200, 0.6%), followed by Florida (3,600, 0.7%) and Washington. North Dakota had the largest monthly percentage gain (2.6%, 700 jobs). Pennsylvania lost the most construction jobs in August (-1,900, 0.7%), followed by Kentucky (-1,400, -1.8%) and Illinois (-1,200, -0.5%). Kentucky had the highest monthly percentage loss, followed by Arkansas (-1.1%, -600 jobs), Pennsylvania and Maine (-0.7%, -200). (AGC's rankings are based on seasonally adjusted data, which in D.C. and six states is available only for construction, mining and logging combined.)

           On Monday, the Trump administration announced the implementation of a 10% tariff on $200 billion worth of Chinese imports to the U.S., including a wide range of construction materials and supplies. Scheduled to take effect on September 24, the complete list of Chinese goods falling under this latest round of tariffs numbers in the thousands. Starting January 1, 2019, the level of tariffs on these Chinese goods will increase to 25%, unless progress is made on trade negotiations with the administration. AGC posted a primer on 2018 trade action affecting the construction industry and memos on contractual provisions private and federal/federal-aid contractors should consider in light of the tariffs. On September 12, the National Association of Home Builders posted an analysis estimating that "More than 10% of the value of these goods [subject to the new tariffs] is made up of items commonly used in residential construction. Even though less than half of the value ($9.9 billion) is exclusive to home building and remodeling, a 25% tariff would be equivalent to a $2.5 billion tax increase on the industry." Readers are invited to send information on the impact of tariffs on the price and availability of materials or on demand for projects to simonsonk@agc.org.

           Hurricane Florence left large areas of the Carolinas submerged, without power, or cut off due to damaged or flooded roads and rail lines, and several rivers may not crest until early next week. As a result, it is too early to tell how much stabilization, restoration or replacement of buildings and infrastructure will be required, or what projects will be postponed or cancelled. Readers are invited to send information on the impact of damage or supply disruptions on the price and availability of materials or on demand for projects to simonsonk@agc.org.

           The value of construction starts in August, not seasonally adjusted, fell 12% y/y from August 2017, data provider ConstructConnect reported on September 13, while year-to-date starts for the first eight months of 2018 combined slipped 5.0% from the same period in 2017. Nonresidential building starts declined 9.1% y/y and 7.6% year-to-date. Civil (heavy engineering) starts fell 10% y/y but rose 10% year-to-date. Residential starts tumbled 15% y/y and 9.7% year-to-date.

           The Architecture Billings Index (ABI) topped the breakeven 50 mark for the 11th month in a row, with a seasonally adjusted score of 54.2 in August, up from 50.7 in July, the American Institute of Architects reported on Wednesday. The ABI measures the percentage of surveyed architecture firms that reported higher billings than a month earlier, less the percentage reporting lower billings; any score above 50, on a 0-100 scale, indicates an increase in billings. Scores (based on three-month moving averages) were above 50 for each practice specialty: multifamily residential, 55.6 (close to an upwardly revised 55.7 in June); commercial/industrial, 53.6 (up from 52.1); institutional, 52.3 (up from 51.8); and mixed practice, 51.7 (up from 51.0).

           Housing starts increased 9.2% from July to August and 9.4% y/y, the Census Bureau reported on Wednesday. The year-to-date total for January-August combined, not seasonally adjusted, was 6.9% higher than a year ago. Single-family starts increased 1.9% for the month and 6.3% year-to-date but inched down 0.2% y/y. Multifamily starts—an often volatile indicator—soared 27% for the month and 38% y/y while increasing 8.1% year-to-date. Building permits slid 5.7%, seasonally adjusted, from July to August and 5.5% y/y but increased 4.9% year-to-date. Single-family permits declined 6.1% for the month but increased 2.1% y/y and 6.5% year-to-date. Multifamily permits slumped 8.0% for the month and 20% y/y but increased 1.1% year-to-date.

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