Input, bid-price PPIs remain mild in December; employment rises in 35 states in 2023
Sunday, February 4, 2024
by: Ken Simonson, Chief Economist, AGC America

Section: AGC National

Input prices and bid prices for construction were little changed in December from November or year-over-year (y/y), unlike the steep increases in 2021 and 2023, according to data the Bureau of Labor Statistics posted on January 12. The producer price index (PPI) for material and service inputs to new nonresidential construction declined 0.3%, not seasonally adjusted, for the month and rose 1.8% y/y, down from 6.7% y/y in 2022 and 20% in 2021. Despite the recent moderation, the cumulative change in the inputs PPI since February 2020 is 37%, nearly double the 19% increase in the consumer price index, the most commonly cited measure of inflation. The index for new nonresidential building construction—a measure of prices that contractors say they would bid to erect a fixed set of buildings—rose 0.1% for the month and just 0.4% y/y, compared to 19% y/y in 2022 and 12% in 2021. Changes in PPIs for new, repair, and maintenance work by subcontractors were mixed: roofing contractors, down 0.1% for month and up 8.9%, y/y; plumbing, 0.1% and 3.3%; electrical, 0 and 2.5%; and concrete contractors, 0.3% and -1.5%. AGC posted tables of construction PPIs.

Seasonally adjusted construction employment rose in 2023 in 35 states, fell in 14 states and the District of Columbia, and held steady in Missouri, according to AGC’s analysis of data BLS posted on January 23. Texas added the most construction jobs (32,800 or 4.2%), followed by California 25,900, 2.8%). South Dakota had largest percentage gain (21%, 7,700 jobs), followed by Arkansas (13%, 7,600). New York lost the most jobs (-15,900, -3.9%), followed by Colorado (-4,400, -2.4%). New York also had the largest percentage loss, followed by Hawaii (-3.6%, -1,400 jobs). Construction employment rose from November to December in 32 states, fell in 15 states and D.C., and was flat in Alaska, Indiana, and Wyoming. New Jersey added the most jobs over the month (3,800, 2.4%), followed by Pennsylvania (3,700, 1.4%). South Dakota had the largest monthly percentage gain (4.1%, 1,200 jobs), followed by West Virginia (3.1%, 1,000). Ohio lost the most construction jobs in December (-4,100, -1.7%), followed by New York (-3,500, -0.9%). The largest percentage loss occurred in D.C. (-1.9%, -300), followed by Kentucky (-1.8%, -1,700). (For D.C., Delaware, and Hawaii, BLS posts combined totals for mining, logging, and construction; AGC treats the changes as all from construction.) 

Total construction starts in current dollars jumped 20% in December from November at a seasonally adjusted annual rate but declined 4% for the full year compared to 2022, Dodge Construction Network reported on January 18. Nonbuilding starts rose 13% and 16%, respectively. Nonresidential building starts soared 37% for the month but fell 8% for the year. Residential building starts rose 8% in December but declined 13% for the year.

The value of construction starts in current dollars (not adjusted for inflation) fell 28.5% y/y in December and 4.9% for the full year, data firm ConstructConnect reported on January 19. Nonresidential building starts fell 45% and 1.5%, respectively. Engineering (civil) starts fell 19% y/y but rose 13% for the full year. Residential starts fell 8.9% and 18%.

The Architecture Billings Index (ABI) in December registered a score of 45.4, seasonally adjusted, little changed from November’s 45.3 and the fifth-straight reading below the breakeven 50 mark, the American Institute of Architects (AIA) reported on Wednesday. AIA calls the index “a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months.” The ABI is derived from the share of responding architecture firms that report a gain in billings compared to the previous month less the share reporting a decline in billings, presented on a 0-to-100 scale. Thus, any score below 50 means more firms reported decreased billings than increased billings, compared to the month before. Readings for practice specialties (based on three-month averages) were all below 50 but had mixed changes from November: institutional, 46.5 (down from 47.0); commercial/industrial, 46.4 (up from 46.1); residential (mainly multifamily), 45.8 (up from 43.2); and mixed practice, 42.3 (up from 42.1).

Housing starts (units) in December declined 4.3% from November but increased 7.6% y/y at a seasonally adjusted annual rate, the Census Bureau reported on January 18. Single-family starts fell 8.6% for the month but rose 16% y/y. Multifamily (five or more units) starts climbed 7.5% for the month but fell 9.5% y/y. Residential permits rose 1.9% for the month and 6.1% y/y. Single-family permits increased for the 11th-straight month, by 1.7% from November and 33% y/y. Multifamily permits rose 1.4% for the month but plunged 27% y/y.