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July 2014 Economic News

The construction industry employed more than six million workers in May for the first time since June 2009, driving unemployment down to 8.6 percent, the lowest May level.

This month in numbers:
8.6% - Construction employers added 6,000 workers in May, and the industry's unemployment rate dropped from 10.8 percent a year earlier to 8.6 percent, the lowest May rate in six years. Employment reached 6,004,000, the largest workforce since June 2009, with an increase of 188,000 jobs (3.2 percent) from May 2013. Residential construction employers added 3,300 jobs in May, and 105,600 jobs (4.9 percent) since May 2013. Nonresidential firms added 2,700 jobs in May, and 82,000 jobs (2.2 percent) year-over-year. Credit: Census Bureau

49 - Homebuilders warmed to the struggling single-family market in June, according to the National Association of Homebuilders' (NAHB) Housing Market Index, which improved by four points to a five-month high of 49. Index scores above 50, which have not been reached since January, indicate a positive overall perception of the market.

''After several months of little fluctuation, a four-point uptick in builder sentiment is a welcome sign, and shows some renewed confidence in the industry. However, builders are facing strong headwinds, including the limited availability of labor.''
- Kevin Kelly, NAHB Chairman

88 - The National Association of Home Builders' Leading Markets Index (LMI) was unchanged in May, retaining April's 88 score despite adding nine metropolitan areas year-over-year. Thirty percent of the metros measured recorded higher scores in June, and 83 percent of the markets have shown an improvement since June 2013. The score indicates that the U.S. remains roughly 12 percent below normal pre-recession housing and economic activity, as measured by housing starts, home prices and employment data.

New Home Construction, May:
Residential construction levels dipped in May, as the rate of building permits issued for new homes fell 6.4 percent from April. Permits were issued at a seasonally adjusted rate of 991,000, compared to the downwardly revised 1.06 million-unit pace in April. Permit levels declined 1.9 percent year-over-year. The decline was caused by volatility in the multifamily sector.

Housing starts in May were at a seasonally adjusted annual rate of 1.001 million, a 6.3 percent decline from the 1.071 million-unit pace in April. The May rate was 9.4 percent higher than a year earlier, when starts were at a rate of 915,000.

Single-family permits were issued at a rate of 619,000 in May, up 3.7 percent from the revised rate of 597,000 in April. Multi-family permits reached a rate of 372,000, compared to 462,000 in April, a 19.5 percent decline. On a non-seasonally adjusted basis, 91,000 building permits were issued in May, 59,500 of which were for single-family units.

Single-family units were started at a rate of 625,000, a decrease of 5.9 percent from April's 664,000 rate but 24.8 percent higher than in May 2013. Multi-family starts were at a rate of 376,000, compared to 407,000. On a non-seasonally adjusted basis, 94,200 units were started in May, including 59,700 single-family starts. Credit: Commerce Department

New Home Sales, May
Recent ''glitches'' are casting doubt on the government's ability to produce accurate economic reports. The first quarter Gross Domestic Product estimate, for example, showed slight growth in April but was revised June 24 to show a 2.9 percent decrease. That said, new single-family home sales reportedly rose 18.6 percent in May to a seasonally adjusted annual rate of 504,000, a new post-recession high and the largest one-month jump since January 1992. Sales were up 16.9 percent from May 2013. The report included a margin of error of more than 17 percent, which means the data should come with a full shaker of salt. Credit: Commerce Dept.

Construction Materials
Materials prices for construction continued to climb in April, as the Producer Price Index (PPI) for construction inputs added 0.4 percent from March and 1.5 percent year-over-year. National wholesale goods prices expanded 0.7 percent in April and are up 3.1 percent year-over-year. Contractors should put time limits on project bids to hedge against increasing materials costs.

''The consistent uptick in prices is at least partially attributable to the colder-than-normal winter, which interrupted the usual flow of construction [materials]. Nationally, construction spending has not been rising in recent months, which implies recent increases in materials prices are not a purely economic phenomenon.''
- Anirban Basu, economist, Associated Builders and Contractors

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