Construction Shows Widespread Employment Gains Housing Stays Hot CPI Mild
Nonfarm payroll employment by state, seasonally adjusted, rose in 26 states and the District of Columbia and fell in 24 for the year ending in October, BLS reported today. Construction again showed more widespread growth, rising in 29 states and falling in 20. (There was no change in DC and data were not reported for Hawaii.) Six states had construction gains of at least 6%, led by Georgia and Louisiana (+9% each).
BLS released its annual estimates of occupational employment and wages for 2002 on Wednesday (www.bls.gov/news.release/ocwage.toc.htm). Average (mean) wages for construction and extraction were in the middle of the 22 major occupational groups, at $17.47. The report shows employment and mean and median hourly wages for 770 detailed occupational groups, including 58 in construction and extraction. Among the 58, the top three were elevator installers and repairers ($25.99), first-line supervisors/managers ($22.92), and pile-driver operators ($21.84). At the low end were helpers-for painters ($9.66), roofers ($9.85), and carpenters ($10.34).
Housing starts and building permits stayed hot in October. The government reported Wednesday that permits, a reliable indicator of starts in the next few months, rose to a seasonally adjusted annual rate of 1,973,000 in October, up 5% from the upwardly revised September figure and nearly 9% above the year-ago level. Single-family authorizations set a record of 1,535,000, 3% above the September total and 20% higher than in October 2002. Multi-unit permits jumped 13% from a month ago and 3.5% from a year ago. Comparing the first 10 months of 2003 and 2002 shows a 9% increase for single-unit starts and a 1% drop for multi-units.
Two other indicators give grounds for optimism aboout continued housing activity. The National Association of Home Builders reported Wednesday that its housing market index, a monthly gauge of builder sentiment, declined slightly from October's four-year high as all three components "dipped, but remained in historically healthy ranges" in November. And both Freddie Mac and the Mortgage Bankers Assn. reported this week that their weekly average 30-year fixed mortgage rates dropped, the latter to the lowest rate since July.
The consumer price index for all urban consumers (CPI-U) was unchanged from September to October after seasonal adjustment, following two straight increases of 0.3%, the Bureau of Labor Statistics (BLS) reported Tuesday. The 12-month change was only 2%, with a 1.3% increase in the "core" index that omits food and energy costs. The CPI for urban wage earners and clerical workers (CPI-W), used for many labor contract adjustments, fell 0.2% for the month and rose only 1.9% over the past 12 months. This week, crude oil futures prices have risen sharply, bringing the near-month price at yesterday's close to $32.86, 25% higher than a year ago. But gasoline and diesel prices have been flat or slightly falling for the past few weeks, according to the Energy Information Administration's weekly surveys. Although the crude oil prices are likely to filter through to petroleum products over the next several weeks, the outlook for overall consumer prices in the near term remains benign.
The biggest threat to price stability may come from deteriorating trade relations. This week the U.S. announced it would restrict some textile and apparel imports from China, which promptly canceled a trade mission to Chicago hours before it was set to depart. The U.S. refusal to drop steel tariffs led China and the European Union to threaten this week to impose retaliatory tariffs. The U.S. and Latin American countries failed this week to agree to a broad framework for advancing a hemispheric free trade agreement. And Congress appears sure to adjourn for the year without replacing a tax subsidy that the World Trade Organization has declared illegal and which the EU has said it will counter with record retaliatory tariffs if repeal doesn't occur by March 1.
The combination of a monthly drop in the CPI-W, an 0.1% increase in average hourly earnings, and an 0.3% rise in average weekly hours produced a rise of 0.5% in real (net of inflation) average weekly earnings for the month of October, BLS reported Tuesday. The series rose 0.5% from October 2002. Average hourly earnings in construction rose 1.7% over the 12-month period before seasonal or price adjustment. At $19.11 per hour, the average wage in construction was 24% higher than for all private-sector production workers.
The government on Wednesday announced Iraq reconstruction contracts that it plans to let. The Daily Report for Executives reported, "17 will be for construction, including five worth $5 billion for repairing Iraq's electrical grid. Another five awards worth $4 billion will be for public works and water projects. Other contracts include: two worth $1 billion for transportation and communications systems; two worth $1 billion for fuel distribution and repair of the oil industry infrastructure; and two worth $1 billion to build police stations and prisons.
The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics.
Copyright © 2002 Mike Holt Enterprises,Inc.