Employment Hits Eight-Year High in November; Spending, Job Openings Rise in October
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Construction spending totaled $1.173 trillion at a seasonally adjusted annual rate in October, an increase of 0.5% from the upwardly revised September rate and 3.4% from the October 2015 rate, the Census Bureau reported on December 1. The the year-to-date (YTD) total for January through October compared to the same months of 2015 was up 4.5%. Public construction jumped 2.8% for the month but fell 1.5% YTD. The largest public component, highway and street construction, increased 1.9% for the month but just 0.2% YTD. The other major public segment, educational construction, climbed 4.1% for the month and rose 5.3% YTD. Private residential spending increased 1.6% in October and 5.7% YTD. New multifamily construction gained 2.8% for the month and 18% YTD; new single-family construction also gained 2.8% from September and increased 5.1% YTD; and residential improvements dipped 0.6% for the month but rose 2.5% YTD. Private nonresidential spending declined 2.1% for the month but increased 7.7% YTD. By subsegment, in descending order of October size, power (electric power plus oil and gas pipelines and field structures) decreased 4.3% for the month but added 7.2% YTD; manufacturing skidded 2.7% in October and 3.1% YTD; commercial (retail, warehouse and farm) slipped 0.7% for the month but rose 9.0% YTD; office fell 1.2% in October but jumped 28% YTD; and health care fell 3.3% in October but rose 1.6% YTD.
There were 205,000 construction industry job openings, seasonally adjusted, at the end of October, the Bureau of Labor Statistics (BLS) reported in its monthly Job Openings and Labor Turnover Survey (JOLTS). Openings amounted to 2.9% of combined employment plus openings. Both figures were the highest for November, by far, since the series began in 2000. In contrast, the number of hires (332,000) was little changed from the November level in the previous seven years. One possible interpretation of these facts is that contractors have been unable to find the workers they need, hence have a low hiring rate and a high rate of openings at the end of the month."The nation is projected to produce fewer high school graduates in all of the 10 graduating classes between 2013 and 2023, compared to the highest recorded number of graduates in 2013," according to a report released by the Western Interstate Commission for Higher Education (WICHE). "While the country is projected to see three years of growth between 2024 and 2026, this will be a short-term increase as the average size of graduating classes between 2027 and 2032 is expected to be smaller than those in 2013....There is significant regional variation with the Northeast and the Midwest experiencing continuing declines in the number of high school graduates while the West will see slight increases, and the South will see significant and steady increases. [The South] is the only region that is projected to experience an increase in the number of high school graduates for every year of the projections, even though that number is expected to contract after 2025." These trends imply shrinking long-time demand in much of the nation for high school and higher education construction.
The Dodge Momentum Index rose in November for the 10th time in 12 months, by 0.3% from its revised October reading and by 18% from November 2015, Dodge Data & Analytics recently reported. 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....This suggests that construction activity should continue to strengthen in 2017. The uptick for the Momentum Index in November was due to a 4.1% rise in the commercial building component, while the institutional component slipped 5.2% in the month. Institutional planning had shown strength earlier in 2016, but has since receded, and is now 2% lower than last year. Commercial planning, on the other hand, had a very weak start to the year but has since moved forward and is now 35% above last year."