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Construction industry continues to shed jobs

WASHINGTON — Construction employment fell by 21,000 (0.4 percent), seasonally adjusted, in September to 5.604 million, the Bureau of Labor Statistics (BLS) reports.

The industry has added only 19,000 jobs on net since reaching a low in February, whereas the overall private sector has added jobs for nine straight months. Over the past 12 months, the industry has shed 210,000 employees (3.6 percent).

Among the five BLS categories of construction, one only has added jobs in the last year: 8,500 (1.0 percent) in heavy and civil engineering construction, the segment most helped by stimulus, military base realignment and New Orleans flood-prevention funding. Employment fell in residential building (37,200, 6.1 percent), nonresidential specialty trade contractors (108,400, 5.1 percent), residential specialty trade contractors (55,500, 3.5 percent), and nonresidential building (17,000, 2.4 percent).

Architectural and engineering services employment, a harbinger of future demand for construction, was roughly level for the month and down 1.6 percent year-over-year. Architectural services employment, closely associated with building construction, fell 6.2 percent from a year ago (not seasonally adjusted), whereas engineering and drafting services employment, more connected to public works and power construction, was off 0.6 percent (unadjusted). Average hourly earnings of all employees in construction fell 1 cent, seasonally adjusted, in September to $25.22, just 28 cents (1.1 percent) higher than in Sept. 2009. For the entire private sector, earnings rose 1.7 percent over the year to $22.67.

Three articles in the Wall Street Journal last week showed improvements in commercial rents and vacancy rates, but not necessarily enough yet to spark demand for construction. “In a sign that the country’s commercial real-estate market is finally turning the corner, new statistics show that office rents that have been falling throughout the economic downturn are beginning to stabilize,” the Journal reported. “Average effective rents—taking into account concessions such as a few months of free rent — for some four billion square feet of office space tracked by research firm Reis Inc. fell by just a penny in the last three months, the smallest quarterly decline since 2008… Rents continue to fall in many areas hit hard by the housing bust, including Phoenix, Las Vegas and San Diego. In another sign that the bottom is near, the increase in the national vacancy rate in each of the past two quarters was smaller than quarterly changes throughout 2009… In addition to the 135 million square feet of occupied space that businesses have already given up, many offices around the country are filled with the vacant desks of laid-off workers… Another factor in what’s likely to be a slow recovery: changes in workplace design that require far fewer square feet of office space per employee. In San Francisco, for example, accounting giant Deloitte recently inked a deal that reduces the square footage of its San Francisco headquarters by about 40 percent, even though the firm plans to expand its head count in the city by 10 percent over the next year… Chattanooga, Dayton and Tulsa all saw vacancy-rate increases of one percentage point or more in the third quarter.”

“U.S. shopping malls have arrested their declines in occupancy and lease rates and begun a slow recovery, but retail landlords caution that a stronger rebound will depend on job gains and renewed consumer confidence… Vacancy rates at malls in the top 80 U.S. markets declined to 8.8 percent in the third quarter, down two-tenths of a percentage point from a year earlier, according to data released Wednesday by (Reis.) The occupancy gain was the first since the fourth quarter of 2006. Meanwhile, third-quarter mall lease rates held steady… marking the first quarter that didn’t show a year-over-year decline in lease rates in two years, according to ReisShopping-center vacancies held steady in the third quarter at 10.9 percent. Lease rates declined by one-tenth of a percentage point… the smallest decline since the second quarter of 2008… Many retailers remain cautious about opening additional stores until the broader economy shows more strength. And more vacancies are on tap as video-rental chain Blockbuster Inc., which sought Chapter 11 bankruptcy protection in September, plans to close 500 to 800 stores… Reis found the biggest gains in retail occupancy in markets such as New York, northern New Jersey, Houston and Austin. Areas that… continued to lose occupancy… included Phoenix, Seattle and San Bernardino and Riverside, California.”

“The nation’s apartment market strengthened in the third quarter, with national vacancies seeing one of the sharpest declined on record. The national apartment-vacancy rate stood at 7.2 percent at the end of the third quarter, according to Reis data. That was down from the second quarter’s 7.8 percent and 7.9 percent at the end of the third quarter a year ago. (Demand topped) 84,000 units, the largest number of units leased in a single quarter since Reis began publishing such data in 1999. So far this year, nearly 158,000 apartments have been filled, a reversal from the nearly 21,000 units emptied during the same period a year ago. Effective rent, the amount paid after discounts, edged up 0.6 percent … led by a 2.2 percent gain in New York… Greenville, South Carolina, and suburban Virginia also saw rental gains topping 2 percent… Miami, Jacksonville, Florida, and Las Vegas each dipped 0.2 percent. Overall, rent fell in 10 of the 82 markets Reis surveys. Vacancy rates ranged from 2.3% in New Haven, Connecticut, to 12.1 percent in Jacksonville.


The Federal Highway Administration (FHWA) last week introduced a new quarterly National Highway Construction Cost Index to track changes in winning bid prices for federal-aid highway projects that capture labor and overhead as well as materials costs. The index was set to 1.00 in the base year of 2003, peaked at 1.35 in Sept. 2006 (meaning bid prices were 35 percent higher than in 2003) and fell back to 1.04 by June 2009.


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