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Construction adds 71,000 jobs to lead October employment jump; bond issues do well
Nonfarm payroll employment jumped by 337,000, seasonally adjusted, in October, the Bureau of Labor Statistics (BLS) reported Friday, following upwardly revised gains of 139,000 in September (revised from 96,000) and 198,000 in August (revised from 128,000). Construction employment rose to a record 7,016,000, up 71,000 from September and 105,000 (1.5%) from October 2003. BLS Commissioner Kathleen Utgoff commented, "Some of this unusually large [one-month] gain reflected rebuilding and cleanup activity in the Southeast following the four hurricanes that struck the U.S. in August and September. In the 12 months prior to October, construction employment increased by 16,000 per month on average. About three-fourths of October's gain occurred among specialty trade contractors (54,000). Building construction also added [11,000] jobs over the month." Both of these employment categories were at record levels. BLS's third construction category, heavy and civil engineering construction, added 5,000 jobs in October but remained 3% below its March 2001 peak. Average hourly earnings for construction workers rose to $19.33 per hour, seasonally adjusted, in October, up just 1.4% from October 2003 but still 22% higher than the average for all private nonsupervisory or production workers. The all-industry average rose 2.6% over that span.
Voters nationwide approved the overwhelming share of bond issues for construction. The Bond Buyer Online (www.bondbuyer.com) reported Thursday that $26.2 billion out of $28.9 billion (91%) of bond issues (mainly for construction) was approved. Voters approved a variety of measures to fund transportation projects or to earmark existing taxes for transportation, in addition to giving widespread support to school construction bonds.
Factory orders dropped 0.4% in September, seasonally adjusted, the Census Bureau reported Wednesday, and 0.3% in August after rising 1.7% in July. Orders for the first nine months of 2004 exceeded the January-September 2003 total by 11%. Orders for construction equipment rose 5% from August to September, following surges of 15% in August and 7% in July. The year-to-date total was up 44%. Orders for construction materials and supplies fell 2% in September after rising 3% in August and 0.4% in July. Year-to-date orders were 13% higher than in 2003.
Same-store sales (sales at stores open at least 13 months) for major retail chains grew an average of 4% from October 2003 to October 2004, according to surveys of reports on Thursday. Some of the best results were posted by higher-end chains, such as Neiman-Marcus (+13%) and Nordstrom (+11%), while chains whose customers are presumably more affected by high gasoline prices, such as Wal-Mart and Dollar General (both +3%), lagged. Last month, KB Toys announced it would close 141 to 238 by January 31, in addition to the 427 stores it has closed over the previous eight months. It plans to keep about 600 stores open.
The Institute for Supply Management reported Wednesday that "nonmanufacturing business activity increased for the 19th consecutive month in October .new orders, employment, order backlogs, imports, prices, and exports increased." Price increases were reported for the following items important to construction: aluminum, asphalt, concrete, construction materials in general, copper, diesel fuel, fuel surcharges, plastic resins, plywood, PVC products, and steel products. Concrete and steel products were reported in short supply. Construction was listed among industries reporting inventory increases (third of five listed) and the highest rates of: slowing in supplier deliveries (fourth), increase in prices paid (fifth), growth in backlog of orders (first), and feeling that their inventories are too high (first).
have been reporting higher revenue per available room (revpar), reflecting increases
in both occupancy rates and room rates. For instance, last month the Wall Street
Journal reported that Marriott International "said its North American systemwide
[revpar] increased 8.3%. Room rates were up more than 4% and occupancy rose nearly
three percentage points to 75%. International business continued to surge, with the
number of international guests visiting U.S. hotels rising 21%." These figures
may stimulate hotel construction and renovation. Another Journal article on October
27 said, "Hotels will earn investors the highest returns among the five major
property types, according to a new report to be released in a few weeks by a trio
of real-estate research firms
The total unleveraged, average annual return on
investment in full-service hotels is expected to exceed 13% over a 10-year holding
period, surpassing returns expected for apartment, industrial, office, and retail
.the sector has experienced limited new construction, unlike other
property types." But another trend is to convert hotels into condos. "In
any major city-D.C., Chicago, New York-this is a growing trend," according to
a Washington Post story last month, quoting hotel broker Marc Magazine. The article
cited recent and pending conversions in the D.C. area, New York, Philadelphia, Toronto,
and San Diego.
> The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics. All rights reserved.
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