Construction-input PPIs jump in March, outpace contractors' prices; job openings climb

The producer price index (PPI) for final demand in March, not seasonally adjusted, rose 0.5% from February and 3.0% year-over-year (y/y) from March 2017, the Bureau of Labor Statistics (BLS) reported on Tuesday. AGC posted tables and an explanation focusing on construction prices and costs. Final demand includes goods, services and five types of nonresidential buildings that BLS says make up 31% of total construction. The PPI for final demand construction, not seasonally adjusted, climbed 0.2% for the month and 3.6% y/y, the largest y/y increase since July 2012. The PPI for new nonresidential building construction—a measure of the price that contractors say they would charge to build a fixed set of five categories of buildings—rose 3.6% y/y. Increases ranged from 3.2% y/y for office buildings to 3.6% for warehouses, 3.8% for schools and health care buildings and 4.3% for industrial buildings. PPI increases for subcontractors' new, repair and maintenance work on nonresidential buildings ranged from 1.1% y/y for roofing contractors to 3.7% for concrete contractors, 4.0% for plumbing contractors and 4.5% for electrical contractors. The PPI for inputs to construction—excluding capital investment, labor and imports—comprises a mix of goods (56%) and services (44%). This index jumped 5.6% y/y, which exceeded the 3.6% PPI increase for new nonresidential building construction, implying a cost squeeze for contractors. The PPI for inputs to construction, goods (including items consumed by contractors, such as diesel fuel) rose 5.8% y/y—the biggest jump since 2011, as the sub-index for energy soared 18%, while the PPI for goods less food and energy rose 4.5%. The index for inputs to construction, services increased 5.3% y/y. PPIs for inputs to seven types of new nonresidential structures had increases ranging from 4.3% for industrial structures to 6.2% for power and communications structures. PPIs for inputs to new residential structures rose 5.8% y/y for both single-family and multifamily. Goods important to construction that had major one- or 12-month price changes include diesel fuel, down 0.4% in March but up 40% y/y; lumber and plywood, up 1.8% for the month and 14% y/y; aluminum mill shapes, 1.4% and 11%, respectively; copper and brass mill shapes, -1.8% and 11%; gypsum products, 0 and 8.4%; steel mill products, 5.5% and 7.1%; ready-mixed concrete, 3.0% and 6.7%; and plastic construction products, 0.8% and 5.8%. Among services important to construction, the PPI for truck transportation of freight rose 0.2% for the month and 5.9% y/y.

            There were 196,000 job openings in construction, not seasonally adjusted, at the end of February, up from 169,000 in February 2017 and the highest February total since 2007, BLS reported today in its latest Job Openings and Labor Turnover Survey (JOLTS) release. The industry hired 306,000 employees in February, little changed from the 309

,000 hired in February 2017. BLS reported on April 6 that there were 732,000 unemployed jobseekers in February whose last job was in construction, the lowest February total in the 19-year history of that series. Together, these figures suggest contractors are still eager to hire more workers but are having difficulty finding ones who have construction experience.

            "The construction industry, which may not spring readily to mind as an industry that could have its supply chain affected by tariffs, is also vulnerable to higher costs of many of its major inputs," Wells Fargo Economics reported on Thursday. A table in the report shows that 27% of construction industry inputs are subject to potential American tariffs on Chinese goods. "Not only would tariffs directly raise the prices of Chinese-produced goods, but non-Chinese producers of those goods could use the opportunity to raise their prices."

            On Wednesday, construction data provider ConstructConnect reported, "March's volume of construction starts, excluding residential activity,...versus an extraordinarily strong March of last year, was -18.9%." Nonresidential starts in January-March 2018 were down 22% from January-March of 2017. Heavy engineering (civil) starts gained 2%, while nonresidential building starts plunged 34% (comprising institutional starts, -16%; commercial, -41%, and industrial, -66%). 

            The Census Bureau on Tuesday posted a blog on women's earnings by occupation that included a link to a table listing the number of men and women in 30 construction occupations and their median earnings in 2016. Women earned 80% as much as men in all full-time, year-round occupations. In construction and extraction occupations combined, women earned 88% as much as men but constituted only 2.6% of all such workers. Median annual earnings for all workers were $40,860, nearly identical to the $40,852 median for construction and extraction occupations. The 148,000 women in these occupations earned a median of $35,859, 88% of the median $40,675 earned by the 45.9 million women in all occupations. The 5.5 million men in construction and extraction occupations earned a median of $40,926, 81% of the $50,741 median for the 60.7 million men in all occupations. Of the 30 construction occupations, the most numerous were construction laborers: 1,150,000 men and 30,000 women (2.5%). Women laborers earned 94% of men. There were only eight construction occupations with enough women for Census to post ratios of women's to men's median earnings. Women's median earnings exceeded men's in one of those eight occupations: operating engineers and other construction equipment operators, including pile-driver operators, with 263,000 men and 6,600 women (2.4%). The women earned a median of $50,129, 108% of the $46,485 median earnings of men. The above figures exclude construction managers, who are included among management occupations. There were 44,900 women construction managers, 7.8% of the total. The women had median earnings of $62,218, 87% of the $71,907 median earned by the 528,000 men.


Sign up for News Updates

1 Start 2 Complete

Fill in your name and email to sign up for news updates.