Nonfarm payroll employment in May increased by 75,000, seasonally adjusted, from April and by 2,350,000 (1.6%) year-over-year (y/y) from May 2018, the Bureau of Labor Statistics (BLS) reported on Friday. The unemployment rate was 3.6%, matching the April rate as the lowest rate since December 1969. Construction employment increased by 4,000 for the month and 215,000 (3.0%) y/y to 7,482,000, the highest mark since December 2007. Average hourly earnings in construction rose 3.2% y/y to $30.68, 10.2% above the average for all private-sector employees ($27.83, a 3.1% y/y increase). The unemployment rate in construction, not seasonally adjusted, fell to 3.2% from 4.4% in May 2018), and the number of unemployed jobseekers with construction experience declined to 294,000 (down from 415,000). These were the lowest figures for any month in the 20-year history of both series. (Not-seasonally-adjusted data may be affected by normal weather and holiday patterns and thus should not be compared to levels in other months.)
There were 404,000 job openings in construction at the end of April, not seasonally adjusted, a jump of 146,000 (57%) from April 2018, and the highest total for any month since the series began in December 2000, BLS reported today in its latest Job Openings and Labor Turnover Survey (JOLTS) release. The industry hired 569,000 employees in April, not seasonally adjusted. Together, the record-high job openings at the end of April, record-low construction unemployment in May, and nearly 50-year low for the total unemployment rate underscore the challenge that contractors face in finding acceptable workers to hire. This difficulty, rather than a slowdown in demand for structures, may explain the weak employment gain in May.
"Economic activity expanded at a modest pace overall from April through mid-May, a slight improvement over the previous period," the Federal Reserve reported on Wednesday in the latest "Beige Book," based on information collected from mid-April through May 23. The Beige Book is a compilation of informal soundings of business conditions in the 12 Fed districts, which are referenced by the name of their headquarters cities. "Residential construction and real estate both showed overall growth, but both sectors saw wide variation in sentiment across districts....Solid hiring demand was noted for retail, business services, technical, manufacturing and construction jobs and by staffing agencies in general. However, stronger employment growth continued to be constrained by tight labor markets, with districts citing shortages of both high- and low-skill workers.... Reports from manufacturers on input prices were mixed, with some districts citing an easing in steel and other metals prices, while contacts in others noted that raw materials prices remained elevated. Construction materials prices, including those for lumber, also eased in several districts." AGC compiled all construction-related comments.
The Dodge Momentum Index, "a monthly measure of the first (or initial) report for nonresidential building projects in planning," fell 1.0% in May, Dodge Data & Analytics reported on Friday. Dodge says the index has been "shown to lead construction spending for nonresidential buildings by a full year. The May decline for the Momentum Index was due entirely to a 6.9% drop by its commercial component, as its institutional component rose 8.1%. The Momentum Index continues to settle back from the most recent highs achieved last summer. On a year-over-year basis, the Momentum Index in May was 9.2% lower than a year ago, with a 16.0% drop by its commercial component outweighing a 1.8% gain by its institutional component. Although the trend for the overall Momentum Index is downward, so far the pullback has been measured, suggesting that there remains enough nonresidential building projects in the pipeline to support near-term stability for construction activity. This is particularly true for the institutional side of nonresidential building."
President Trump announced on Friday that he would indefinitely suspend the tariff he had threatened to impose on all Mexican imports, starting today at 5% and potentially rising to 25% by October. The tariffs would have affected Mexican steel and other imported construction materials, as well as potential demand for structures by businesses whose costs would have been affected or that would have faced retaliatory measures by Mexico.
The National Association of Home Builders reported in its "Eye on Housing" blog on Tuesday, "NAHB analysis of the most recent 2017 American Community Survey (ACS) data reveals that the median age of construction workers is 42, a year older than a typical worker in the national labor force." A map shows the median age of construction and all workers in each state. "The median age of construction workers varies across the states....States with the oldest median age of construction workers (45 years old) are Connecticut, Maine and New Hampshire, followed by Illinois, Kentucky, New Jersey, Pennsylvania and Wyoming [44 each]. Construction workers are younger on average in the central part of the nation. Half of all construction workers in Utah are under 38, while in Nebraska and Texas half are under 39....Kentucky is the state where the median age of construction workers is 4 years higher than the overall median, followed by Illinois, Wyoming, Arizona and New Mexico (+3). [In contrast, in] Delaware, the median age of construction workers is 2 years younger than the overall median. The ACS data also allow analyzing median age by occupations. Construction occupations with younger workers include helpers, roofers and fence erectors. Older workers are concentrated in managerial positions such as inspectors, construction supervisors and construction managers." A table shows median ages for 28 construction occupations.