Housing, durable goods data are mixed
The Census Bureau today released revised and more detailed estimates of value of construction put in place (www.census.gov/pub/const/C30/newtc.html). The new data categorize construction by end use rather than owner or functional category. For example, private medical office buildings were classified as "office" buildings previously, but under the new classification these buildings are in "health care." Data are provided separately on federal and state/local construction, and on numerous types of commercial, educational, manufacturing, amusement and recreation, and public works construction. The total for May 2002 has been reduced slightly (to a seasonally adjusted annual rate of $847 billion, from $852 billion reported July 1) but comparisons to April 2002 (down 0.2%) and May 2001 (down 0.3%) are similar to the initial report. Two reports on home sales released Thursday pointed in opposite directions. The government reported that sales of new single-family homes in June were essentially unchanged from May. The May and April figures were each revised down by more than 2% from the previous report, but the last two months are each 12% higher than the comparable months of 2001. Meanwhile, the National Assn. of Realtors reported that existing-home sales in June tumbled 12% from May and 4% from June 2001. But on a quarterly basis, both new and existing-home sales are at or near record levels. In addition, both show the median home-sales price rose over the past year, implying that most homeowners (even non-sellers) have experienced rising wealth that at least partially offsets stock market losses.
Seasonally adjusted durable goods orders (excluding semiconductors) fell 3.8% from May to June, the sharpest drop in 7 months, Census reported yesterday. The report was a surprise in light of positive indicators for June from the Federal Reserve's industrial production index and the Institute of Supply Management's index, both of which also gauge manufacturing activity.
The Bureau of Labor Statistics (BLS)'s employment cost index for the second quarter showed that total compensation rose 1% seasonally adjusted, similar to the quarterly change in the previous 7 quarters. Wages and salaries rose by 1%, benefit costs by 1.3%. In contrast, total compensation in construction decelerated to a quarterly growth of only 0.4%, down from 0.7% in the first quarter and 1.0-1.4% in the previous 6 quarters. Wage growth in construction (not seasonally adjusted) slowed to 3.0% in the past 12 months, compared to 3.4% in the 12 months through March 2002 and 4.3% in the 12 months through December 2001.
The number of mass layoffs (involving 50 or more employees at a single site) fell to 1557 events involving 159,000 workers in June from 1726 events and 180,000 employees in May and 2107 events with 254,000 workers in June 2001, BLS reported Wednesday. Mass layoffs in construction decreased to 84 events involving 5800 workers, from 165 events involving 13,500 workers in May and 89 events involving 6900 workers in June 2001.
Monday's Wall Street Journal reported that "Businesses in New York, Washington and other large cities are finding it increasingly difficult to obtain workers' compensation insurance for their employees, as insurance companies more closely monitor their accumulation of risk exposure in urban areas."
Premiums in nearly all lines have increased by an average of 10% to 50%, according to a new survey by the Council of Insurance Agents and Brokers" (www.ciab.com). CIAB says its members are all in the top 1% of all commercial insurance brokers. The survey also found that "Terrorism coverage is scarce, and particularly hard for property, general liability and umbrella coverages¿Small, medium and large commercial accounts throughout the United States continue to experience rate increases from 10% to 50%, with the largest increases (20% to 50%) hitting medium and large accounts¿Carriers continue to tighten terms and conditions with¿uch higher deductibles, more coverage exclusions and 'fewer things to negotiate'¿6% of broker respondents reporting mold exclusions added to property and construction renewals, and 71% saying pollution exclusions are added at renewal." The median increase for construction risks is 30-50%. Q of the week: What has been your experience with wage and benefit increases? Reply to firstname.lastname@example.org.