Construction employment rose by 33,000, the largest gain in nearly four years, but much of the increase may have represented catch-up from a weather-exacerbated drop of 22,000 jobs in January.

Nonfarm payroll employmentincreased by 192,000 in January, seasonally adjusted, and theunemployment ratedipped 0.1 percentage point to 8.9 percent (9.5 percent, not seasonally adjusted), the Bureau of Labor Statistics reported on March 4.Construction employmentrose by 33,000 (0.6 percent), the largest gain in nearly four years, but much of the increase may have represented catch-up from a weather-exacerbated drop of 22,000 jobs (initially estimated as 32,000) in January. The total in February, 5,509,000, was 24,000 (0.4 percent) lower than in February 2010 and 2.2 million (29 percent) lower than in the peak month, April 2006.

Construction employmentdropped from the same month a year earlier for the 47th consecutive month but the 0.4 percent decline was the smallest year-over-year decrease since June 2007, suggesting the slump is close to ending. Theunemployment rate in constructionwas 21.8 percent, not seasonally adjusted, down from 27.1 percent in February 2010 but still the highest of any industry and more than double the all-industry rate. (BLS does not publish seasonally adjusted rates by industry.)

Among BLS’ five construction employment categories, heavy and civil engineering construction had the largest year-over-year percentage gain, 3.3 percent (and 0.5 percent for the month), probably as a result of federal stimulus, base realignment and Gulf Coast hurricane-prevention projects. Nonresidential specialty trade contractors added jobs for the month and year-over-year (0.8 percent and 0.6 percent, respectively). Other segments were mixed: nonresidential building, -0.3percent and 0.5 percent; residential specialty trades, 0.8 percent and -3.0 percent; and residential building, 0.4 percent and -3.4 percent.

Architecture and engineering services employment, a harbinger of future demand for construction, rose 0.2 percent and 0.1 percent.Average hourly earnings in constructionslipped 4 cents in February to $25.39, seasonally adjusted, up 20 cents (0.8 percent) from a year ago.

Manpower Inc. reported that 16 percent of the 18,000 employers it surveyed expect to add employees and 6 percent expect to cut in the second quarter. “When seasonal variations are removed from the date, thenet employment outlook[the difference between the percentage expecting to add less those expecting to cut] is +8 percent,” unchanged from the first-quarter outlook and up from 6 percent a year ago. “Employers have a positive outlook in all of the 13 industry sectors included in the survey,” including construction, where 16 percent of employers expect to hire and 10 percent to cut, for a net employment outlook of 65. The net for construction was 14 percent in the Northeast, 11 percent in the Midwest, 5 percent in the West and 1 percent in the South.

Thenational average of construction costs(labor and materials, general contractor and subcontractor overhead costs and fees) inched up 0.1 percent in the fourth quarter and 0.7 percent from a year earlier, construction consultancyRider Levett Bucknallreported on March 1, based on data it compiled in 13 metro areas. Year-over-year increases ranged from 3.2 percent in Los Angeles and 2.6 percent in San Francisco to -1.0 percent in Las Vegas.

The Means Historical Cost Index, which incorporates materials costs, labor rates and equipment rentals for 318 U.S. and Canadian cities, rose 0.9 percent from Oct. 1 to Jan. 1, and 2.3 percent from Jan. 1, 2010, the price-tracking firmRSMeansreported last month. The 30-city average wage and benefits for 20 trades was $45.44, a rise of 45 cents (1 percent) from mid-2010.

“Reports from the 12 Federal Reserve districts indicated thatoverall economic activitycontinued to expand at a modest-to-moderate pace in January and early February,” the Fed reported March 2 in the latest Beige Book, a summary of informal soundings of businesses in each district. (Districts are referred to by the name of their headquarters cities.) “Recent activity inresidential real estatevaried, but overall sales and construction remained at low levels across all districts. Construction activity was described as flat or down by Cleveland, Atlanta, Minneapolis, and Kansas City. … The outlook for residential sales and construction improved marginally, although activity is expected to remain at low levels. … A slight uptick is expected in Chicago and San Francisco construction.

“Nonresidential constructionremained weak according to most accounts. The Boston, Philadelphia, Atlanta, Chicago, St. Louis, and Dallas districts reported weak levels of construction activity, while Chicago noted a slight pickup. Cleveland district contractors cited increasing inquiries, and unexpected growth in commercial construction was noted in the Minneapolis district. Overall, contacts anticipate a slow recovery in commercial real estate markets.”

New orders for U.S. manufactured goodsjumped 3.1 percent in January, adjusted for seasonal variation but not price changes, for the sixth increase in seven months, the Census Bureau reported March 4. Orders were 10.8 percent higher than in January 2010.Orders for construction materials and suppliesincreased 2.0 percent for the month and 8.5 percent year-over-year;orders for construction machinery, which tend to be volatile, fell -0.7 percent in January but leaped 107 percent year-over-year.

Occupanciesimproved in the fourth quarter of 2010 for all five major commercial property types in more than 50 metro areas surveyed byDividend Capital Research, the firm reported March 7. “New construction remained at 40-year lows, which should lead to continued occupancy increases in 2011. Office occupancies improved 0.3 percent ... and rents improved 0.4 percent for the quarter but were down 1.5 percent annually. Industrial occupancies improved 0.2 percent ... but rents fell 0.45 percent [and 4.5 percent]. Apartment occupancy was flat … and rent…improved 0.7 percent [and 1.9 percent]. Retail occupancy improved 0.4 percent ... but rent [fell 1.0 percent and 3.8 percent]. Hotel occupancies improved 1 percent and [revenue per available room] declined 6.9 percent for the quarter but was up 9.8 percent year-over-year.”