Contractors add 19,000 jobs in March, jobless rate lowest in seven years

Associated General Contractors of AmericaConstruction employers added 19,000 workers to payrolls in March, bringing industry employment to the highest level since June 2009, while the industry’s unemployment rate dropped to the lowest March level in seven years, according to an analysis of new government data by the Associated General Contractors of America. Association officials warned that the pool of available workers is declining rapidly, raising the prospects for significant labor shortages if demand continues to expand.

Construction employment totaled 5,964,000 in March, a gain of 151,000 or 2.6 percent from a year earlier, compared with a rise in total nonfarm employment of 1.7 percent over that period, Simonson noted. Residential building and specialty trade contractors added a combined total of 9,100 workers in March and 103,000 (4.8 percent) over 12 months. Nonresidential construction—building, specialty trades and heavy and civil engineering contractors—grew by 9,900 employees last month and 48,800 (1.3 percent) since March 2013.

The unemployment rate for workers actively looking for jobs and last employed in construction declined from 14.7 percent a year earlier to 11.3 percent last month. Ken Simonson, the association’s chief economist, noted that the unemployment rate for construction workers had fallen by more than half since March 2010, when it reached 24.9 percent. During that time, the number of unemployed workers who last worked in construction declined by 1.3 million, but industry employment increased by only 445,000.

Association officials said that one reason the industry is likely to face labor shortages is because of the declining number of secondary-level construction training programs. They urged federal, state and local officials to take steps designed to make it easier for schools, construction firms and local trade associations to establish new training programs for future construction workers.

Construction firms expect demand to grow in 2014

Associated General Contractors of AmericaMany firms plan to start hiring again and most contractors predict demand will either grow or remain stable in virtually every market segment this year according to a survey by the Associated General Contractors of America. The survey, conducted as part of Optimism Returns: The 2014 Construction Industry Hiring and Business Outlook, provides a generally upbeat outlook for the year even as firms worry about growing worker shortages, rising costs and the impact of new regulations and federal budget cutting.

Stephen E. Sandherr, the association’s chief executive officer noted that many firms plan to begin hiring again, while relatively few plan to start making layoffs. Forty-one percent of firms that did not change staff levels last year report they plan to start expanding payrolls in 2014, while only two percent plan to start making layoffs. However, net hiring is likely to be relatively modest, with 86 percent of firms reporting they plan to hire 25 or fewer new employees this year.

Among the 19 states with large enough survey sample sizes, 100 percent of firms that did not change staffing levels last year in Utah plan to start hiring new staff this year, more than in any other state. (Click here for state-by-state survey results.)

Contractors have a relatively positive outlook for virtually all 11 market segments covered in the Outlook, in particular for private-sector segments. For five of those segments, at least 40 percent of respondents expect the market to expand and fewer than 20 percent expect the market to decline in 2014. The difference between the optimists and pessimists – the net positive reading – is a strong 28 percent for private office, manufacturing and the combined retail/warehouse/lodging segments, and 25 percent for power and hospital/higher education construction.

Among public sector segments, contractors are more optimistic about demand for new water and sewer construction, with a net positive of 17 percent. Contractors are mildly optimistic about the market for highway construction, with a net positive of 10 percent. Respondents are almost equally divided regarding the outlook for the other four segments, ranging from net positives of 5 percent for public buildings, 4 percent for schools, 3 percent for transportation facilities other than highways, to a negative of 2 percent for marine construction.

Sandherr added that contractors’ market expectations are significantly more optimistic than they were at this time last year. At that time, more contractors expected demand for highway, other transportation, public building, retail, warehouse and lodging, K-12 schools and private officers to shrink than expected it to grow.

Many contractors also report they plan to add new construction equipment in 2014. Seventy-three percent of firms plans to purchase construction equipment and 86 percent report they plan to lease it this year. The scope of those investments is likely to be somewhat limited, however. Forty-four percent of firms say they will invest $250,000 or less in equipment purchases and 53 percent say they will invest that amount or less for new equipment leases.

One reason firms may be more optimistic, association officials noted, is that credit conditions appear to have improved. Only 9 percent of firms report having a harder time getting bank loans, down from 13 percent in last year’s survey. And only 32 percent report customers’ projects were delayed or canceled because of tight credit conditions, compared with 40 percent a year ago.

Ninety percent of construction firms report they expect prices for key construction materials to increase in 2014. Most, however, expect those increases will be relatively modest, with 43 percent reporting they expect the increases to range between 1 and 5 percent. Meanwhile, 82 percent of firms report they expect the cost of providing health care insurance for their employees will increase in 2014. Despite that, only 1 percent of firms report they plan to reduce the amount of health care coverage they provide.

Simonson noted that as firms continue to slowly expand their payrolls, they were likely to have a harder time finding enough skilled construction workers. Already, 62 percent of responding firms report having a difficult time filling key professional and craft worker positions. And two-thirds of firms expect it will either become harder or remain as difficult to fill professional positions and 74 percent say it will get harder, or remain as hard, to fill craft worker positions.

Those worker shortages are already having an impact, the economist added. Fifty-two percent of firms report they are losing construction professionals to other firms or industries and 55 percent report they are losing craft workers. As a result, a majority of firms report they have improved pay and benefits to help retain qualified staff. One reason they are likely worried is that nearly half of the firms believe training programs for new craft workers are poor or below average.

Adding to their challenges, 51 percent of contractors report that demand for their services is being negatively impacted by federal funding cuts, new federal regulations and/or Washington’s inability to set an annual budget. “It would appear that Washington is not here to help as far as contractors are concerned,” Simonson noted.

Association officials added that survey respondents would prefer that Washington officials work on other priorities. Seventy-seven percent of firms reported listed having Washington find ways to make it easier to prepare the next generation of skilled workers as a top priority. Sixty-three percent listed repealing all or part of the Affordable Care Act as a top priority. And 63 listed renewing tax deductions and bonus depreciation for construction equipment as a top priority.

The Outlook was based on survey results from over 800 construction firms from every state and the District of Columbia. Varying numbers responded to each question. Contractors of every size answered over 40 questions about their hiring, equipment purchasing and business plans. Click here for Optimism Returns: The 2014 Construction Hiring and Business Outlook report. Click here for the survey results.

New construction starts up 5% in December, 6% for 2013

New construction starts in December grew 5% to a seasonally adjusted annual rate of $554.5 billion, according to McGraw Hill Construction, a division of McGraw Hill Financial.  Although both nonresidential building and housing settled back during the final month of 2013, the nonbuilding construction sector (public works and electric utilities) finished the year on a strong note. For 2013 as a whole, total construction starts advanced 6% to $516.8 billion.  This follows the 10% gain reported for 2012 (which drew support from a record amount of new electric utility starts that year) and modest 2% gains in both 2010 and 2011.  If the volatile electric utility category is excluded, total construction starts in 2013 would be up 14%, following a 9% gain in 2012 and essentially flat activity during 2010 and 2011.

MCGRAW HILL CONSTRUCTION INFOThe December statistics produced a reading of 117 for the Dodge Index (2000=100), compared to 111 in November.  This marked the third highest month for the Dodge Index during 2013, after September’s 118 and October’s 125.  During the first eight months of the year, the Dodge Index had hovered within the fairly narrow range of 100 to 108, but then showed a stronger pace of activity during the final four months, reflecting in part the impact of several very large projects.  In December, large projects that were entered as construction starts included the $1.5 billion Goethals Bridge replacement project in New York and New Jersey, two large natural gas-fired power plants, and two large manufacturing plants.  For all of 2013, the Dodge Index averaged 109, up from 103 in 2012.

Nonresidential building in December slipped 7% to $168.6 billion (annual rate), pulling back for the second month in a row after its elevated pace in October, although its fourth quarter average was still 17% above what was reported in the first quarter.  Several commercial categories in December paused from the improved activity registered earlier in the fall.  New office construction dropped 44% from November which had been lifted by the start of such projects as the $336 million Transbay office tower in San Francisco CA; in contrast, the largest office projects entered as December starts were an $80 million office complex in Cary NC and a $73 million data center in West Des Moines IA.  Similar December declines were registered by hotels, down 42%; and warehouses, down 46%; although the latest month did include the start of an $88 million Amazon distribution center in Windsor CT.  Store construction, which was the one commercial category that did not post a November gain, managed to increase 6% in December.  The December pause for nonresidential building was cushioned by a sharp 110% jump for manufacturing buildings, which reflected the start of two massive chemical plants in Louisiana, each valued at $500 million.

The institutional building categories in December were mixed.  Educational facilities grew 5%, helped by the start of a $213 medical research building in Boston MA and a $151 million college science building in Chicago IL.  Healthcare facilities in December jumped 30% from the prior month’s subdued amount, and featured groundbreaking for an $80 million hospital in Virginia and a $70 million cancer center in Wisconsin.  The smaller institutional categories generally weakened in December, with public buildings (courthouses and detention facilities) down 32%; churches, down 44%; and amusement-related work, down 46% (compared to the previous month which included the $763 million Vikings Multipurpose Stadium in Minneapolis MN).  The transportation terminal category retreated a slight 1% in December, and included the start of a $230 million terminal renovation project at Los Angeles International Airport.

For 2013 as a whole, nonresidential building increased 7% to $168.6 billion, shifting to an upward direction after the 5% decline reported for 2012.  The commercial categories overall advanced 16%, faster than the 13% gain witnessed in 2012.  The strongest gain by commercial category was registered by hotels, up 28%; followed by warehouses, up 27%; office buildings, up 17%; and stores, up 1%.  The small 2013 increase for stores was limited by the comparison to 2012 that included the $400 million renovation to Macy’s flagship department store in New York NY.  The manufacturing building category in 2013 surged 36%, helped by the two large chemical plants in Louisiana reported as December starts as well as by such projects as a $1.7 billion fertilizer plant in Iowa, a $1.7 billion natural gas processing plant in West Virginia, and a $1.5 billion industrial gas products plant in Louisiana.  The institutional building group during 2013 decreased 3%, less severe than declines of 9% in 2012 and 11% in 2011.  The two largest institutional categories performed as follows – educational buildings, down 1%; and healthcare facilities, down 6%.  The smaller institutional categories showed this pattern for 2013 – amusement-related work, up 25%; transportation terminals, down 2%; churches down 11%; and public buildings, down 27%.

Residential building in December dropped 6% to $205.3 billion (annual rate), with both sides of the housing market easing back.  Single family housing slipped 3%, as recent months have shown more of an up-and-down pattern after the consistently steady gains witnessed earlier in the year.  When viewed on a quarterly basis, single family housing still registered consistent growth during 2013, with the fourth quarter up 8% compared to the first quarter.  Multifamily housing in December retreated 13% after November’s increase of the same magnitude.  December’s largest multifamily projects were smaller in scale than what had been reported in the previous month, but still included such substantial entries as a $159 million apartment building in Sunny Isles Beach FL, a $128 million condominium tower in Honolulu HI, and a $127 million apartment building in Brooklyn NY.

The 2013 amount for residential building was $205.5 billion, up 24%, and close to the 31% gain reported for 2012.  Single family housing in dollar terms climbed 26%, similar to the prior year’s 29% hike.  The regional pattern for single family housing in 2013 showed increases for all five major regions, as follows – the South Atlantic, up 33%; the Midwest, up 27%; the West and Northeast, each up 26%; and the South Central, up 18%.  Multifamily housing in 2013 advanced 16%, showing additional growth on top of the increases in 2010 (up 23%), 2011 (up 33%), and 2012 (up 37%).  By major region, multifamily housing revealed this performance in 2013 – the Midwest, up 26%; the Northeast, up 24%; the South Atlantic, up 21%; the West, up 13%; and the South Central, down 6%.  The top five metropolitan areas in terms of the 2013 dollar amount of multifamily starts, with the percent change from 2012, were – New York NY, up 23%; Boston MA, up 74%; Washington DC, unchanged from the prior year; Miami FL, up 12%; and Los Angeles CA, down 24%.  Metropolitan areas ranked 6 through 10 for multifamily starts were – Dallas-Ft. Worth TX, down 6%; Chicago IL, up 52%; Seattle WA, unchanged from the prior year, San Francisco CA, up 12%; and Denver CO, up 17%.

Nonbuilding construction in December soared 40% to $180.6 billion (annual rate), which was the highest monthly rate during 2013.  Bridge construction jumped 210%, boosted by the $1.5 billion Goethals Bridge replacement project in Staten Island NY and Elizabeth NJ.  Other large bridge projects that were entered as December starts were $380 million for bridge construction in Stillwater MN and $297 million for bridge construction on the I-35W reconstruction project in Texas.  The highway construction category also had a

Strong December, rising 19% with the help of $693 million allocated to highway work on the I-35W project in Texas.  River/harbor development in December rose 21%, supported by the start of a $290 million seawall replacement project in Seattle WA.   Sewer construction in December increased a moderate 6%, while water supply construction fell 6%.  The miscellaneous public works category (which includes such diverse project types as pipelines, mass transit, and outdoor sports stadiums) dropped 14% in December, although it did include a $425 million stadium renovation project for Texas A&M University in College Station TX.  The electric utility category in December departed from its generally downward trend during 2013, rising 127%.  Large power plant projects included as December construction starts were two natural gas-fired plants located in New Jersey ($842 million) and Pennsylvania ($800 million), as well as three wind power facilities located in Texas ($300 million and $200 million) and Oklahoma ($225 million).

For the full year 2013, nonbuilding construction dropped 12% to $142.7 billion.  After achieving a record high in current dollar terms in 2012, new electric utility starts plunged 57% in 2013.  In contrast, the public works portion of nonbuilding construction increased 9% in 2013, a resilient performance given concerns that tight government budgets would dampen activity.  Of the public works project types, bridge construction showed the largest percentage gain, climbing 55%.  Aside from what was entered into the December construction start figures, large bridge projects in 2013 included the $3.1 billion Tappan Zee Bridge replacement project across the Hudson River in New York and $1.6 billion for work on the Ohio River Bridges in the Louisville KY and southern Indiana area.  With highway construction up 10% in 2013, highway and bridge construction together registered a 21% gain for the full year.  The top five states for highway and bridge construction in 2013, ranked by the dollar volume of activity, were – Texas, New York, California, New Jersey, and Virginia.  The environmental public works categories posted annual gains for 2013, as follows – river/harbor development, up 30%; water supply systems, up 10%; and sewers, up 1%.  The miscellaneous public works category fell back 18% in 2013, following a 61% increase in 2012, due primarily to a sharply reduced amount of new petroleum and natural gas pipeline starts.

The 6% gain for total construction starts at the national level in 2013 was the result of gains in four of the five major regions.  Showing the strongest growth was the Northeast, up 17%; followed by the Midwest, up 9%; the West, up 8%; and the South Central, up 3%.  The South Atlantic was the one major region to experience a decline in 2013, dropping 3%.  The South Atlantic’s shortfall reflected the comparison to 2012 that included the start of two massive nuclear facilities, located in Georgia and South Carolina.  If electric utilities are excluded from the construction start statistics in the South Atlantic, then total construction for that region in 2013 would be up 19%.

 

MONTHLY CONSTRUCTION STARTS

December 2013 November 2013 % Change
Nonresidential Building $168,562 $180,635 -7
Residential Building $205,288 $217,568 -6
Nonbuilding Construction $180,636 $128,600 +40
Total Construction $554,486 $526,803 +5

 

THE DODGE INDEX (Year 2000=100, Seasonally Adjusted)

  • December 2013….117
  • November 2013…..111

 

YEAR-TO-DATE CONSTRUCTION STARTS

12 Mos. 2012 % Change
Nonresidential Building $168,614 $158,122 +7
Residential Building $205,493 $166,159 +24
Nonbuilding Construction $142,695 $162,823 -12
Total Construction $516,802 $487,204 +6

Construction employment declines by 16,000, but unemployment rate also declines

Associated General Contractors of AmericaConstruction employment declined by 16,000 in December but the industry unemployment rate fell to 11.4 percent, according to an analysis of new government data by the Associated General Contractors of America. Association officials noted that the new employment data was likely impacted by cold weather, but also reflects underlying weakness in the construction sector.

Construction employment totaled 5,833,000 in December, an increase of 122,000 from a year earlier, noted Ken Simonson, the association’s chief economist. But while employment grew by 2.1 percent during the past year, construction employment remains nearly 1.9 million below the sector’s April 2006 peak. Meanwhile, the unemployment rate for workers actively looking for jobs and last employed in construction declined from 13.5 percent in December 2012 to 11.4 percent last month.

Nonresidential construction firms lost 22,900 new jobs in December while residential firms added 6,200 jobs. Nonresidential specialty trade contractors lost 12,900 jobs for the month, the most of any segment, while heavy and civil engineering firms – which are most likely to perform federal construction work – lost 8,800 jobs, the second most. Meanwhile residential building contractors added the most new jobs during the past month, 4,800 jobs.

The number of unemployed construction workers dropped from 1,105,000 in December 2012 to 958,000 in December 2013, a decline of 147,000. Yet the industry added only 122,000 new jobs during the same timeframe. The shrinking pool of available construction workers may be one reason so many firms reporthaving a hard time finding qualified workers, Simonson noted.

Association officials said the outlook for construction could be helped by new investments in infrastructure and other construction programs. They urged Congress to finalize Water Resources Development Act legislation to invest in ports and other waterways. They also said Congress and the administration should work together to find a way to pay for needed repairs to aging roads and bridges before the current transportation legislation expires at the end of September.

Construction spending increase by 5.9% between November 2013 and 2013

Associated General Contractors of AmericaTotal construction spending increased between October and November and for the year amid growing private-sector demand, according to an analysis of new Census Bureau data by the Associated General Contractors of America. Association officials noted, however, that the spending levels were held back by declining public sector investments for both the month and the year.

Construction put in place totaled $934 billion in November, rising 1.0 percent since October and up 5.9 percent since November 2012. Private residential construction spending increased by 1.9 percent in November and jumped 17 percent from a year earlier. Private nonresidential spending climbed 2.7 percent for the month and 1.0 percent year-over-year. Public construction spending dropped 1.8 percent for the month and 0.2 percent over 12 months.

Over the past 12 months, the biggest jump in construction spending has occurred in new multifamily construction, which rose 0.9 percent for the month and 36 percent year-over-year. The lodging sector recorded the second highest annual gain, with spending rising 32.7 percent for the year and 0.3 percent for the month. Spending on communications facilities experienced the largest monthly increase, jumping 11.2 percent in November, although it is still down 10.5 percent for the year.

The largest private nonresidential category, power construction—which includes oil and gas field and pipeline projects as well as power plants, renewable power and transmission lines—increased by 3.3 percent in November but is actually down 24.2 percent for the year. The analysis noted, however, that there was a surge in power construction during the last quarter of 2012 as contractors rushed to finish wind projects before the expected expiration of the wind production tax credit at the end of 2012. Those credits were extended for projects that broke ground by the end of 2013, explaining the more recent surge. “Both the electricity and oil and gas components of power construction should do well in 2014,” he added.

Highway and street construction, the largest public category, declined by 0.4 percent in November but is up 4.6 percent compared to a year ago. The next largest public niche, educational construction, increased by 1.1 percent for the month but was unchanged for the year, he added.
Association officials noted that the spending figures would have been even better had it not been for the public sector declines. They urged Congress and the administration to work together in 2014 to pass vital transportation and other infrastructure legislation.

Slight Contraction for Architecture Billings Index Contracts Slightly

AIAAfter six months of steadily increasing demand for design services, the Architecture Billings Index (ABI) paused in November.  As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending.  The American Institute of Architects (AIA) reported the November ABI score was 49.8, down from a mark of 51.6 in October.  This score reflects a slight decrease in design services (any score above 50 indicates an increase in billings).  The new projects inquiry index was 57.8, down from the reading of 61.5 the previous month.

Key November ABI highlights:

  • Regional averages: South (52.0), Midwest (51.6), West (50.2), Northeast (47.5)
  • Sector index breakdown: multi-family residential (55.2), mixed practice (53.1), commercial / industrial (48.6), institutional (47.7)
  • Project inquiries index: 57.8

The regional and sector categories are calculated as a 3-month moving average, whereas the index and inquiries are monthly numbers.

Construction employment increases in 194 of 339 metro areas

Associated General Contractors of AmericaConstruction employment expanded in 194 metro areas, declined in 88 and was stagnant in 57 between August 2012 and August 2013, according to a new analysis of federal employment data released today by the Associated General Contractors of America. Association officials added that despite the widespread gains, construction employment reached peak levels for August in only 19 of 339 metro areas.

Los Angeles-Long Beach-Glendale, Calif. added the largest number of construction jobs in the past year (8,900 jobs, 8 percent); followed by Boston-Cambridge-Quincy, Mass. (8,700 jobs, 16 percent); Houston-Sugar Land-Baytown (8,200 jobs, 5 percent) and Atlanta-Sandy Springs-Marietta, Ga. (8,100 jobs, 9 percent). The largest percentage gains occurred in Pascagoula, Miss. (36 percent, 1,500 jobs); Eau Claire, Wis. (30 percent, 1,000 jobs); Fargo, N.D.-Minn. (25 percent, 2,100 jobs) and Lake Charles, La. (22 percent, 2,100 jobs).

The largest job losses from August 2012 to August 2013 were in Sacramento-Arden-Arcade-Roseville, Calif. (-4,900 jobs, -12 percent); followed by Gary, Ind. (-4,100 jobs, -18 percent); Riverside-San Bernardino-Ontario, Calif. (-3,400 jobs, -5 percent) and Northern Virginia (-3,300 jobs, -5 percent). The largest percentage decline for the past year was in Gary, Ind., Rockford, Ill. (-17 percent, -800 jobs); Modesto, Calif. (-14 percent, -1,000 jobs); Shreveport-Bossier City, La. (-13 percent, -1,100 jobs) and South Bend-Mishawaka, Ind.-Mich. (-13 percent, -600 jobs).

Fargo, N.D.-Minn. experienced the largest percentage increase among the 19 cities that hit a new August construction employment high from the prior 2008 peak (22 percent higher). Corpus Christi, Texas added the most jobs since reaching its prior August peak in 2012 (3,600 jobs). Phoenix-Mesa-Glendale experienced the largest drop in total construction employment compared to its prior, August 2006, peak (-86,800 jobs) while Lake Havasu City-Kingman, Ariz. experienced the largest percentage decline compared to its August 2005 peak (-74 percent).

Association officials said construction employment in many areas was getting a boost from growing private sector demand for new residential and energy facilities. They added, however, that declining investments in infrastructure and other public projects was restraining growth, and in some areas, contributing to declining sector employment.

View construction employment figures by state and rank.

August ABI shows higher demand for design services

AIAThe August 2013 Architecture Billings Index (ABI) showed more acceleration in the growth of design activity nationally. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the August ABI score was 53.8, up from a mark of 52.7 in July. This score reflects an increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 63.0, down from the reading of 66.4 the previous month.

“As business conditions at architecture firms have improved eleven out of the past twelve months, it is fair to say that the design professions are in a recovery mode,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA. “This upturn signals an impending turnaround in nonresidential construction activity, but a key component to maintaining this momentum is the ability of businesses to obtain financing for real estate projects, and for a resolution to the federal government budget and debt ceiling impasse.”

Key August ABI highlights:

  • Regional averages: West (54.8), Northeast (54.4), Midwest (52.8), South (51.9)
  • Sector index breakdown: mixed practice (60.1), commercial / industrial (54.8), multi-family residential (52.1), institutional (50.8)
  • Project inquiries index: 63.0

The regional and sector categories are calculated as a 3-month moving average, whereas the index and inquiries are monthly numbers.

Construction spending hits four-year high in July

Associated General Contractors of AmericaTotal construction spending hit a four-year high in July as private residential and nonresidential activity increased while public spending declined, according to an analysis of new Census Bureau data by the Associated General Contractors of America. Association officials urged lawmakers in Washington to make infrastructure investment a top federal priority before funding runs out at the end of September.

Construction put in place in July, $901 billion, was the highest mark since June 2009, and an increase of 0.6 percent from the month before and 5.2 percent from July 2012. Totals for May and June were revised up, implying a stronger second quarter for the overall economy than the government reported last week.

Private residential spending rose 0.6 percent for the month and 17 percent from July 2012. New single-family construction climbed 0.5 percent in July and 29 percent from a year ago. New multifamily spending edged up 0.1 percent in July and advanced 39 percent year-over-year.

Private nonresidential spending gained 1.3 percent in July and 2.0 percent year-over-year. Components with substantial increases since July 2012 included lodging, up 33 percent; warehouses, up 11 percent; and the largest private nonresidential category, power—including oil and gas as well as electricity—up 5 percent. However, there were decreases in private health care construction, down 3 percent; and communication, down 12 percent, Simonson noted.

Public construction spending slipped 0.3 percent for the month and 3.7 percent over 12 months. The two largest public components both dropped: highway and street, down 1.1 percent in July and down 3.8 percent year-over-year; and educational, down 1.5 percent and 12 percent, respectively, Simonson said.

Association officials urged policy makers in Washington to enact federal spending bills by September 30 in order to avoid costly interruptions to federally funded construction projects. They said even a short lapse in appropriations could be very disruptive to construction schedules for infrastructure and building projects.

Architecture Billings Index Stays Positive in July

AIAThe Architecture Billings Index (ABI) saw a jump of more than a full point last month, indicating acceleration in the growth of design activity nationally. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lead time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the July ABI score was 52.7, up from a mark of 51.6 in June. This score reflects an increase in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 66.7, up dramatically from the reading of 62.6 the previous month.

Key July ABI highlights:

  • Regional averages: Northeast (54.3), South (54.2), West (51.1), Midwest (50.8)
  • Sector index breakdown: mixed practice (56.9), commercial / industrial (54.2), multi-family residential (53.3), institutional (50.6)
  • Project inquiries index: 66.4

The regional and sector categories are calculated as a 3-month moving average, whereas the index and inquiries are monthly numbers.