Construction Employment Climbs in June While Falling Economy-wide

The unemployment rate jumped from a seasonally adjusted 6.1% in May to 6.4% in June, a 9-year high, the Bureau of Labor Statistics (BLS) reported Thursday. Nonfarm payroll employment fell by 30,000, following a drop of 70,000 in May. However, BLS Commissioner Kathleen Utgoff noted, “employment in construction edged up in June for the fourth month in a row. Since February, the number of jobs in the industry has increased by 101,000 [and by 76,000, or 1.1%, since June 2002]. Within construction, residential building activity has been buoyed by low interest rates.” Of BLS’s three construction segments, “construction of buildings” employment fell by 1,500 last month but has risen by 38,300 (2.4%) since June 2002. Heavy and civil engineering construction employment gained 2,700 last month but lost 25,000 jobs (2.7%) over the year. Specialty trade contractors added 14,500 in the month and 63,100 (1.5%) over the 12-month span. Average weekly hours in construction were unchanged from one month and 12 months ago, while average weekly earnings rose by 2.7% over the year.

Employment changes by metropolitan area vary greatly, as Wednesday‘s BLS report covering May figures showed. “Among the 272 metropolitan areas for which over-the-year comparisons could be made, 148 reported decreases in employment, 119 recorded increases, and 5 had no change.” The largest over-the-year percentage decreases were in San Jose, Tulsa, Flint, and Toledo. The largest increases were in Elkhart-Goshen and Bloomington, Indiana; Albany, Georgia; and West Palm Beach-Boca Raton, Florida. The website (http://www.bls.gov/sae) includes construction employment for some metro areas.

The seasonally adjusted value of construction put in place decreased in May, the Census Bureau reported Tuesday. Using its longstanding seasonal weights, the decline was a steep 1.7% from April, to an annual rate of $870 billion. Under a newer classification (which will become the only data Census posts after this month, posted at http://www.census.gov/pub/const/C30/newtc.html), the decline was 0.5%, to $868 billion. Census also made its usual annual revision of past data, upping the total for 2002 to $861 billion, a 1% gain over the revised 2001 total. Construction in the first five months of 2003 is 1.6% ahead of the same period in 2002. Under the new classification, private residential construction rose by 8% in 2002 and 9% in January-May 2003, private nonresidential fell by 13% and 10%, and public construction of all types climbed 5% and 0.6%.

Surveys of state budgets issued last week by the National Assn. of State Budget Officers (http://www.nasbo.org) and the Rockefeller Institute of Government (http://www.rockinst.gov) show continuing pressure. “While the national economy appears to be making some incremental progress, state budgets will likely feel continuing strain. Many of the sectors of the economy that are the most important to state revenue collections, like retail sales and capital gains, continue to languish,” the Rockefeller Institute reports in its July State Fiscal Brief. “Almost every state in the union is facing sizeable deficits in the current and coming fiscal years.”

New orders for manufactured goods (excluding semiconductor manufacturing), seasonally adjusted, rose 0.4% in May but showed a mixed pattern, Census reported Wednesday. Durable-goods orders fell 0.4% (previously estimated as -0.3%), whereas nondurables jumped 1.2%. Orders for construction machinery sagged 2.2% for the month and 3.9% compared to May 2002. Orders for construction materials and supplies rose 0.6% for the month but fell 0.8% from the May 2002 level.

The Institute for Supply Management (ISM) also reported mixed results in its monthly surveys. The ISM manufacturing index, released Tuesday, inched up from 49.4 in May to 49.8 in June, implying growth in the overall economy but not in manufacturing. The ISM nonmanufacturing index, released Thursday, jumped from 54.5 in May to 60.6 in June, its highest reading since September 2000. Construction was listed among the industries reporting: highest rates of growth of business activity and employment, slower supplier deliveries, inventory increases, growth in order backlogs, and highest rates of feeling that inventories were too high. Price increases were reported for construction labor and materials.

Auto and light-truck sales rose to a seasonally adjusted annual rate of 16.4 million in June from 16.1 million in May, the industry reported Tuesday. Imports grabbed most of the gain. A few days before, Nissan announced it would shift some production from Tokyo to Smyrna, Tennessee, adding 800 jobs there. This move is likely to result in new construction there and at suppliers’ factories; it follows an announcement last winter that Toyota would build a new plant outside San Antonio. And last Tuesday, the Wall Street Journal reported Texas Instruments “outlined plans to construct its first U.S. chip-making plant since 1996, identifying a site near its Richardson, Texas, headquarters for the estimated $3 billion project. By the end of 2005, TI expects to break ground…Construction and outfitting of the plant would be spread over ‘several years’…a spokeswoman said.”

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