Employment dips in March but rises for year; most metros have gains through February

            Nonfarm payroll employment in March increased by 103,000, seasonally adjusted, from February and by 2,261,000 (1.5%) year-over-year (y/y) since March 2017, the Bureau of Labor Statistics (BLS) reported today. The unemployment rate remained at a 17-year low of 4.1% for the sixth month in a row. Construction employment slipped by 15,000 for the month—possibly affected by severe weather—but increased by 228,000 (3.3%) y/y to 7,150,000. Average hourly earnings in construction increased 2.9% y/y to $29.43, or 9.7% higher than the average for all private-sector employees ($26.82, up 2.7% y/y). The unemployment rate in construction, not seasonally adjusted, fell to 7.4% (from 8.4% in March 2017), the lowest March rate in the 19-year history of the series. The number of unemployed jobseekers with construction experience was 696,000 (down from 764,000 a year earlier), the lowest March total since 2001. (Not-seasonally-adjusted data may be affected by normal weather and holiday patterns and thus should not be compared to levels in other months.) The reduction in construction unemployment over the year, 68,000, represents less than one-third of the increase in construction employment, implying that most of the employment gains are coming from other industries or new labor-force entrants, not industry veterans.

            Construction employment, not seasonally adjusted, rose from February 2017 to February 2018 in 257 (72%) of the 358 metro areas (including divisions of larger metros) for which BLS provides construction employment data, fell in 50 (14%) and was unchanged in 51, according to an AGC analysis released 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. (12,000 construction jobs, 13%), and Phoenix-Mesa-Scottsdale (9,900 construction jobs, 9%), followed by the Dallas-Plano-Irving division (9,700 combined jobs, 7%) and Houston-The Woodlands-Sugar Land (9,300 construction jobs, 4%). The largest percentage gain again occurred in Merced, Calif. (33%, 700 combined jobs), followed by Midland, Tex. (22%, 5,400 combined jobs), Lake Charles, La. (21%, 4,700 construction jobs), and Weirton-Steubenville, W. Va.-Ohio. (21%, 300 combined jobs). The largest job losses again were in Baton Rouge, La. (-6,500 construction jobs, -12%) and St. Louis, Mo. (-2,500 combined jobs, -4%), followed by Columbia, S.C. (-2,200 combined jobs, -11%), and the Fort Worth-Arlington, Texas division (-2,000 combined jobs, -3%). The largest percentage loss again occurred in Auburn-Opelika, Ala. (-38%, -15200 combined jobs), followed by Baton Rouge and Columbia, S.C. (Not-seasonally-adjusted data may be affected by normal weather and holiday patterns and thus should not be compared to levels in other months.)

            The announced tariffs on steel and aluminum, as well as duties on specific steel producers already in effect, are having mixed impacts. A steel service center in the Southeast told AGC on Tuesday, "we are on allocations with Gerdau—we have around half of our historical monthly average....Inventory is nonexistent—having to buy off of rolling 2-3 months in advance with no guarantee that material promised will be rolled or shipped. Hardest to find is #4 and #5 x 40'....We expect more shortages. Domestic capacity is less than demand. Imports have stopped or been priced up by the 25% tax." A contractor in the Midwest wrote to AGC, "We just received quotes for fencing that were way over the initial budget with a limited amount of time that the subcontractor would hold their pricing....Suppliers are telling us that they are expecting regular 5-10% increases and will only hold their quotes for five days. Just yesterday a budget was hammered by drywall partitions." But "the U.S. price for aluminum last week was $2,387 a metric ton, off 7% from a peak in February," the Wall Street Journal reported today. Nevertheless, the price is much higher than a year ago. Price and supply comments are welcome at simonsonk@agc.org.

            Regarding steel studs, investment research firm Thompson Research Group reported on Wednesday in its quarterly survey of building products suppliers, "2018 has already seen four price increases (January, February, March, April), and a fifth price increase is in the works. We expect building product distributors will continue to attempt to stock steel stud inventory in advance of further anticipated price increases." Regarding wallboard, around "80% of survey respondents believe [January's 15-20%] price increase will be 'partially successful'....Industry contacts believe aggregate effective capacity utilization is in the low 90% range. There is some new capacity coming online to meet new demand (American Gypsum's Bernalillo plant & PABCO's new line), and it is our understanding this capacity is coming onto the market in a very measured manner." Regarding insulation, there was a "March 2018 price increase for blown-in insulation products of 9-10% [and a] January 2018 price increase for resi[dential] & commercial batt roll product, ranging from 8%-15%; 73% of survey respondents believe the January increase will be "partially successful....Two manufacturers are selectively bringing capacity back online in 2018 in order to meet increased demand....As 2017 came to a close, industry contacts told us that the insulation industry capacity is almost "full out" on production, and in certain circumstances, business is being turned away due to volume constraints."  

            "The Dodge Momentum Index moved 6.1% higher in March," Dodge Data & Analytics reported today. The index "is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. March's gain was the result of a 9.6% increase in the commercial component—more than erasing the 5.1% decline it had seen the previous month. The gain in the institutional sector meanwhile was milder, moving 1.6% higher, following an 8.1% gain in February."

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