Stimulus-Funded Projects Grow; Construction Jobs Increase
Construction firms added 14,000 new jobs in April, the second consecutive month of employment gains for the industry, according to an analysis of new federal figures released May 7 by the Associated General Contractors of America.
After more than two years of dramatic job losses, the construction industry is once again adding jobs, thanks primarily to the increasing number of stimulus-funded projects now under way, the association noted.
“As [this] report makes clear, the impacts of the stimulus are now being felt across a much broader section of the construction industry,” said Ken Simonson, the association’s chief economist. “The good news is the stimulus is for now turning the tide on construction employment; the bad news is the stimulus is temporary while the construction downturn will be protracted.”
Simonson noted that the construction industry has added 40,000 new jobs since February. Those increases follow more than three years of employment declines that cost more than 2 million construction workers their jobs. Even after the two months of job growth, the industry’s unemployment rate was 21.8 percent, more than twice the national average and the highest April rate since the series began in 1976.
The economist said the job growth appears driven by the stimulus, noting that construction firms are reporting a surge in projects funded by the Recovery Act. He added that the nonresidential construction sector, where most stimulus construction funds were targeted, added 24,600 jobs in April and 36,500 jobs in March. Heavy and civil engineering construction, which includes highway and many public works projects that benefited from the stimulus, alone added 9,000 new jobs last month, the fourth pickup in the past six months.
March Construction Holds Steady
New construction starts in March came in at a seasonally adjusted annual rate of $435.6 billion, essentially unchanged from the previous month, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies.
Improved activity in March was shown by two of construction’s three main sectors–nonresidential building and housing. The third sector, nonbuilding construction (public works and electric utilities), retreated in March after its elevated amount in February. Through the first three months of 2010, total construction on an unadjusted basis was reported at $91.9 billion, up 2 percent compared to the same period a year ago, McGraw-Hill reported.
The March data brought the Dodge Index to 92 (2000=100), the same as February’s revised reading. The Dodge Index hit bottom back in February 2009 at 82, and since then it has basically stabilized at a low level, hovering in the range of 85 to 95.
Nonresidential building in March grew 6 percent to $155.1 billion (annual rate). On the plus side, the healthcare facilities category jumped 58 percent, providing more evidence that it is rebounding after the loss of momentum reported in 2009. The amusement-related category had a particularly strong March, soaring 248 percent, and office construction rose 20 percent. Small gains in March were reported for churches, up 6 percent; and stores, up 1 percent, according to McGraw-Hill.
On the negative side, school construction showed more weakness, sliding 13 percent in March as state and local finances continue to deteriorate. The public buildings category slipped back from earlier strength, retreating 12 percent, and the transportation terminal category dropped 83 percent from an exceptional February. Also posting declines were warehouses, down 6 percent; and hotels, down 27 percent, McGraw-Hill reported.
Residential building, at $146.5 billion (annual rate), increased 6 percent in March. Single-family housing improved 5 percent, making it 11 out of the past 12 months that gains have been recorded. Multifamily housing in March climbed 13 percent, showing improved activity for the fourth month in a row.
McGraw-Hill noted that the 2 percent increase reported for total construction on an unadjusted basis for the first three months of 2010 versus last year was due to a mixed performance by sector. Residential building advanced 35 percent, when compared to the early months of 2009 when single family housing reached bottom. Nonresidential building during the January–March period fell 13 percent compared to a year ago, as the result of this behavior by segment—commercial building, down 39 percent; manufacturing building, down 70 percent; and institutional building, up 5 percent.
Useful perspective is obtained by looking at 12-month moving totals, in this case the twelve months ending March 2010 compared to the 12 months ending March 2009, McGraw-Hill said. On this basis, total construction is down 17 percent, reflecting this pattern by sector—residential building, down 15 percent; and nonresidential building, down 26 percent.
Ending Tax Credit Triggers New-Home Sales Surge in March
With many buyers rushing to take advantage of the federal home-buyer tax credit that expired in April, sales of newly built single-family homes surged 26.9 percent in March to a seasonally adjusted annual rate of 411,000 units, the Commerce Department reported April 23. Sales increases were posted in all four regions of the country.
“Undoubtedly, the tax credit is working,” said Bob Jones, chairman of the National Association of Home Builders and a home builder from Bloomfield Hills, Mich. “Builders are seeing a growing optimism among consumers.”
“The near record-breaking 27 percent increase over February was the result of home buyers taking advantage of the tax credit as well as a carryover of demand that was held back by unusually bad weather in February,” said NAHB Chief Economist David Crowe.
“The increased sales are very welcome news and sales will continue to improve, although we expect them to plateau in late spring and early summer when the credit expires. Following that, the housing momentum will be carried forward by low interest rates, pent up household formations, excellent affordability conditions and a budding employment growth,” Crowe added.
Regionally, sales increased 35.7 percent in the Northeast, 4.3 percent in the Midwest, 43.5 percent in the South and 5.7 percent in the West.
The nationwide inventory of new homes on the market dropped a negligible 0.8 percent in March, to 227,000 units as builders continued to maintain small inventories. With the increased sales pace and low inventory level, the month’s supply of new homes for sale dropped from 8.6 in February to 6.7 in March.
Remodeling Market Poised for Recovery
The decline in remodeling activity may be reaching an end, according to the latest National Association of Home Builders’ Remodeling Market Index reported on April 29. Current market conditions jumped to 47.0 from 36.4 in the fourth quarter of 2009. Future indicators of remodeling business leapt to 48.9 from 31.4 in the last quarter. A new unified measure incorporating both current and future conditions, called the RMI Index, rose to 47.9 from 33.9 in the previous quarter.
The RMI measures remodeler perceptions of market demand for current and future residential remodeling projects. Any number below 50 indicates that more remodelers say market conditions are getting worse than report improving conditions. The RMI has been running below 50 since the final quarter of 2005, but the first quarter 2010 is the best showing since the first quarter of 2006.
“Remodelers are receiving more calls for work, but getting signed contracts is still challenging” said NAHB Remodelers Chairman Donna Shirey, CGR, CAPS, CGP, a remodeler from Issaquah, Wash. “We’re working a little more, but not making more due to tighter margins, onerous federal regulations and consumer anxiety about making large purchases.”
Current conditions for the remodeling market improved in three regions: Northeast 45.8 (from 27.7 in fourth quarter 2009); Midwest 47.0 (from 37.5); and South 49.0 (from 40.0). However, remodeling conditions declined in the West to 36.6 (from 41.7). Major additions climbed to 53.8 (from 40.0), as did minor additions to 49.6 (from 40.7). Maintenance and repair grew to 36.6 (from 27.1).
Summary indices for future market indicators swelled substantially with calls for bids jumping to 56.3 (from 37.5 in fourth quarter 2009) and appointments for proposals soaring to 59.2 (from 34.4). The amount of work committed through the end of July expanded modestly to 33.0 (from 21.9). Backlog of remodeling jobs also strengthened to 47.2 (from 31.9).
“Although the overall RMI and most of its components are still slightly below the break-even point of 50, the recent improvements suggest that the remodeling market may soon reach its bottom and begin to grow in the coming months,” said NAHB Chief Economist David Crowe. “However, professional remodelers are still operating in a highly competitive marketplace and dealing with consumers who are uncertain about the future.”
For more information about remodeling, visit www.nahb.org/remodel. For the full RMI tables, visit www.nahb.org/rmi.
Continued Upward Trend in Architectural Billings
On the heels of more than a two point gain in February, the Architecture Billings Index was up again in March, according to the American Institute of Architects. That’s good news for potential business coming into the pipeline.
AIA reported that the March ABI rating was 46.1, up from a reading of 44.8 the previous month. Though this score reflects a continued decline in demand for design services (any score above 50 indicates an increase in billings), it is the highest score since August 2008. The new projects inquiry index was 58.5.
By region, the Midwest had a reading of 50.5, the Northeast’s reading was 47.0, the reading in the West was 46.0, and the South had a reading of 44.4.
The sector index breakdown shows multi-family residential with a reading of 47.3, institutional with 46.8, a reading of 45.0 for mixed practice, and commercial/industrial with 44.7.
OSHA Asks Local Building Inspectors to Notify OSHA When They See Unsafe Work Conditions
The U.S. Department of Labor’s Occupational Safety and Health Administration is launching a pilot program seeking to partner with building inspectors in 11 American cities to reduce injuries and fatalities at construction sites.
Secretary of Labor Hilda L. Solis has sent letters to the mayors of the selected cities, proposing that OSHA work with and train local building inspectors on hazards associated with the four leading causes of death at construction sites. Under this program, building inspectors would notify OSHA when they observe, during the course of their work, unsafe work conditions. OSHA, in turn, would send a federal agency compliance officer to that workplace for a safety inspection.
In construction, the four leading causes of death are falls, electrocution, being crushed or caught between objects, or being struck by moving machinery or objects.
In her letters, Secretary Solis wrote, “I believe workplace enforcement is not only our responsibility but our moral obligation. We need your help to send our inspectors where they can make the biggest difference.”
“This initiative allows us to expand our eyes and ears,” said Dr. David Michaels, assistant secretary of labor for OSHA. “Although we are adding 110 new inspectors this year, OSHA simply cannot inspect every construction site in the country.”
OSHA seeks to partner with building inspectors in the following cities: Austin, Texas; Boise, Idaho; Cincinnati; Concord, N.H.; Greenwood Village, Colo.; Madison, Miss.; Atlanta Metropolitan area, Georgia; Newark, N.J.; Oakland, Calif.; Washington, D.C.; and Wichita, Kan.
People & Companies in the News
Florida-based Canco General Contractors, a steel building construction company, has opened an office in Greenville, S.C., that will serve the Carolinas, Georgia, Alabama and Tennessee. The office is the first Canco office outside the state of Florida. Canco is headquartered in Plant City, Fla.
Todd Roush, who has been involved in the construction industry for 20 years, has been named division manager. His responsibilities will include developing new business through project management in the firm’s new five-state region.
The McGraw-Hill Companies has appointed Keith Fox president of McGraw-Hill Construction. Fox most recently was president of BusinessWeek.
David C. Jeanes, P.E. has retired as president of the Steel Market Development Institute, a business unit of the American Iron and Steel Institute, after 34 years of service with the organization. He was responsible for developing and implementing an industry-wide strategic plan to advance the competitive use of North American steel in the marketplace.
He is succeeded by Lawrence W. Kavanagh, formerly AISI’s vice president of environment and technology.
Products in the News
Viper25, Viper20S (Select) and Viper20D (Deluxe), manufactured by MarinoWARE® and CEMCO, received an evaluation report (CCRR-0154) from ATI Evaluation Service, a Division of Architectural Testing-Certification Services. This evaluation report will be used by architects, building officials, contractors and distributors throughout the building industry as evidence that the ViperStud Drywall Framing System meets the 2003 IBC and IRC, 2006 IBC and IRC, and the 2009 IBC and IRC building codes.
New on the ’Net
National Gypsum, Charlotte, N.C., introduces its Green Product Score (GPS), an easy-to-use online resource designed to create customized sustainable materials data sheets.
Available at gps.nationalgypsum.com, GPS provides the following data for the National Gypsum products selected for a project: reports on recycled materials that include the percentage of both pre-and post-consumer recycled content; information regarding regional materials, including actual mileage and illustration of the 500-mile radius for the project generated by Google Maps; and product certifications and test results.
