ABC Reports: Nonresidential Construction Spending Flat in February

CEU2“Construction is impacted more by weather than just about any economic segment and the impact of February’s brutal weather is evident in the government’s spending figure.”—ABC Chief Economist Anirban Basu

Spending 4.1.15Blame it on the weather – that is what many economists have been doing over the past two months as economic data continue to disappoint. Retail sales, durable goods orders and other categories have not been as strong as anticipated.

Nonresidential construction has often proved an exception, with the industry’s momentum gaining steam recently. However, in February, nonresidential construction spending remained virtually unchanged inching down 0.1 percent on a monthly basis, according to the April 1 release from the U.S. Census Bureau. The February 2015 spending figure is 4.6 percent higher than February 2014, as spending for the month totaled $611.5 billion on a seasonally adjusted, annualized basis. The estimate for January spending was revised downward, from $614.1 billion to $611.9 billion, while the government revised December’s spending estimate upward from $627 billion to $629.3 billion.

“Construction is impacted more by weather than just about any economic segment and the impact of February’s brutal weather is evident in the government’s spending figure,” said Associated Builders and Contractors Chief Economist Anirban Basu. “ABC continues to forecast robust nonresidential construction spending recovery in 2015 despite the most recent monthly data, with the obvious exceptions of industry segments most directly and negatively impacted by declines in energy prices.

“The broader U.S. economy has not gotten off to as good a start in 2015 as many had expected with consumer spending growth frustrated by thriftier than anticipated shoppers,” said Basu. “With winter behind us and temperatures warming, the expectation is that economic growth will roar back during the second quarter, which is precisely what happened last year. To the extent that this proves to be true, nonresidential construction’s recovery can be expected to persist.”

Seven of 16 nonresidential construction subsectors posted increases in spending in February on a monthly basis.

  • Manufacturing-related spending expanded 6.8 percent in February and is up 37.9 percent on a year-over-year basis.
  • Conservation and development-related construction spending expanded 11 percent for the month and is up 19.8 percent on a yearly basis.
  • Office-related construction spending expanded 2.4 percent in February and is up 19 percent from the same time one year ago.
  • Amusement and recreation-related construction spending gained 2 percent on a monthly basis and is up 22.5 percent from the same time last year.
  • Education-related construction spending grew 0.3 percent for the month, but is down 0.6 percent on a year-over-year basis.
  • Construction spending in the transportation category grew 0.6 percent on a monthly basis and has expanded 9.3 percent on an annual basis.
  • Lodging-related construction spending was up 5 percent on a monthly basis and 10.4 percent on a year-over-year basis.

Spending in nine nonresidential construction subsectors failed to rise in February.

  • Health care-related construction spending fell 0.9 percent for the month and is down 4.5 percent for the year.
  • Spending in the water supply category dropped 7.8 percent from January, but is still 7.4 percent higher than at the same time last year.
  • Public safety-related construction spending lost 2.2 percent on a monthly basis and is down 9.6 percent on a year-over-year basis.
  • Commercial construction spending lost 1.9 percent in February, but is up 13.5 percent on a year-over-year basis.
  • Religious spending fell 4.8 percent for the month and is down 10.3 percent from the same time last year.
  • Sewage and waste disposal-related construction spending shed 1.4 percent for the month, but has grown 19.9 percent on a 12-month basis.
  • Power-related construction spending fell 4.5 percent for the month and is 17.2 percent lower than at the same time one year ago.
  • Lodging construction spending is down 4.4 percent on a monthly basis, but is up 18.2 percent on a year-over-year basis.
  • Sewage and waste disposal-related construction spending shed 7.5 percent for the month, but has grown 16 percent on a 12-month basis.
  • Power-related construction spending fell 1.1 percent for the month and is 13.2 percent lower than at the same time one year ago.
  • Communication-related construction spending fell 6.1 percent for the month and is down 15.5 percent for the year.
  • Highway and street-related construction spending was unchanged in February and is up 3.3 percent compared to the same time last year.

To view the previous spending report, click here.

Wells Fargo Reports: Home Price Appreciation Stabilizing

 

Wells_Fargo_Securities_logoThe S&P/Case-Shiller Home Price Indices posted solid gains in January. The slide in year-over-year home price appreciation appears to have halted. Gains have been strongest in markets with large tech sectors.

More Moderation Expected

  • The 20-city and 10-city composite indices both increased 0.9 percent in January and are up roughly 4.5 percent year over year. The national index posted a 0.6 percent rise on the month, but also increased 4.5 percent year over year.
  • Most measures of home prices are stabilizing around 5 percent year-over-year growth after decelerating for some time. Tight inventories and rising development costs will support prices.

Technology Markets Approaching All-Time Highs

  • Year-over-year gains have been broad based. Weakness has been mostly isolated to the Northeast and Midwest. Cleveland and Washington, D.C. both posted sub-two percent growth.
  • Only two of the twenty housing markets in the report have surpassed their prerecession peak. Many of the markets with large technology sectors, however, are rapidly approaching pre-recession levels.

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ABC Economic Analysis of Construction Job Market & Unemployment Rate

NRRecently, Associated Builders and Contractors (ABC) launched its state-by-state economic analysis with the release of economist Bernard Markstein’s  analysis of construction’s contribution to each state’s gross domestic product. Below is Markstein’s analysis of the construction job market and unemployment rate in each state. This analysis will be produced monthly in addition to ABC’s existing national economic data and analysis

Overview

The construction industry has shown evidence of recovery and appears to be on a mild upward trajectory despite occasional backsliding. In 2014, construction spending for all the major areas rose faster than the rise in construction costs. Last year also marked the fourth year in a row that construction employment grew and the largest annual advance in construction employment since 2005.

This rebound in construction employment has been reflected in the construction unemployment rate. For the United States, that rate—which is reported on a not seasonally adjusted (NSA) basis—has been falling on a year-over-year basis for almost four and a half years. Much of that early decline was due to the exit of workers from the industry as they accepted work in other industries, sought training in a new field, or left the workforce. More recently, the decline in the construction unemployment rate has reflected rising employment in the industry.

The return of construction has been fairly widespread across the nation. On a year-over-year basis, the estimate of the January construction unemployment rate was down in 46 of the 50 states.

As would be expected, the January NSA construction unemployment rate for each state increased from December for all states. Only 11 of the 50 states had a rate below 10% in January, down from 21 states in December.

The one big surprise on a year-over-year basis was Louisiana where the rate jumped from 7.6% in January 2014 to 10.8% in January 2015. Note that even with this dramatic surge in the construction unemployment rate, Louisiana had the 16th lowest rate among the states. That is still quite a comedown from having the second lowest rate in the nation in January 2014. The jump in the rate may reflect the effects of lower oil prices on construction-related activity in the energy sector. There has also been a slowdown in the overall Louisiana economy as evidenced by a rise in Louisiana’s general unemployment rate.

Click here to see a ranking of states’ construction unemployment rankings.

Click here to see each states’ unemployment rate across all industries.

Click here to see a regional breakdown of states’ construction unemployment rates.

The Top Five States

Four of the top five states based on lowest January construction unemployment rates (or in the case of Maryland, Nebraska, and Hawaii, the construction and mining unemployment rate) remained the same as December, though the order was somewhat different. Maryland, which remained number one,   often has a low construction and mining unemployment rate as a result of being a small state with relatively few workers engaged in the construction and mining industries and in an area (bordering Delaware, Pennsylvania, Virginia, and Washington D.C.) where it is easy to move to find work in construction or in other industries.

Hawaii, another state where construction and mining employment are reported together, jumped to number two from number five. Utah, which was number two in December based on revised employment data, slipped to number three. Despite the drop in oil prices, Texas moved up from seventh to fourth in the rankings. That pushed Nebraska, again with a construction and mining unemployment rate, down from number four to number five.

Apparently due to the drop in oil prices and the resulting slowdown in the oil fields, North Dakota fell out of the top five, dropping from third in December to sixth in January.

The Bottom Five States

Four of the five states with the highest construction unemployment rates for January remained the same as in December, although not in the same order. Rhode Island had the highest rate in both January and December (revised up from the earlier estimate).

Illinois had the second highest rate in January, up from the third highest rate in December. Connecticut also moved up one slot in this less-than-desirable list, from fourth highest to third highest. Indiana, which ranked at the 41st lowest rate in December, fell to 47th in January, which is the fourth highest rate.

Michigan had the fifth highest rate in January after suffering from the second highest construction unemployment rate in December. Michigan’s December construction unemployment rate was originally reported as the highest in the country; however, revised data moved the rate down from 15% to 14.5%.

Finally, Georgia’s construction unemployment rate for December was revised down from 14% to 13.4%, dropping it from fifth highest to seventh highest for that month. For January, Georgia recorded a rate of 14.8%, ranking it 38th lowest or 13th highest.

Read more on ABC’s website

Holt Cat® Celebrates Grand Opening Of Little Elm Store, TX

6A53CC47-3003-4829-9854-CA6B5ECD57A6HOLT CAT®(holtcat.com), the Caterpillar® Equipment and Engine dealer for South, Central, North and Northeast Texas, celebrated the grand opening today of a $14 million, 61,000 square-foot full-service facility at 27600 East University Drive in Little Elm, Texas.

The new Denton County store extends HOLT CAT’s presence in the Dallas-Fort Worth Metroplex to nine locations.

“Little Elm is one of the fastest-growing cities in Texas and investments in construction and infrastructure here are driving an ever-increasing demand for Cat® heavy equipment and services,” said Dave Harris, HOLT CAT president and chief operating officer.

“With this new HOLT CAT location, customers can be confident of always having the right machine for the job, backed by knowledgeable advice and expert service delivered by the best-trained technicians in the industry.”

HOLT CAT leaders including CEO Peter M. Holt were joined by customers and state and local dignitaries at the event, including state Sen. Jane Nelson (R-Flower Mound.)

Nelson predicted the new store would deliver important benefits to the region:

“It’s wonderful to see HOLT CAT expand their presence in North Texas to Little Elm, she said. “This investment will not only bring jobs and economic development to our community, but also help to immensely support this area’s rapid growth.”

Army Sergeant First Class Dana Bowman, a retired U.S. Army paratrooper who is a double-amputee and a leading wounded warrior advocate, performed a skydiving show at the event. HOLT employs more than 350 veterans, approximately 17 percent of its workforce, and is dedicated to actively expanding job opportunities for men and women who have served in the armed forces.

The new Little Elm store features a comprehensive range of offerings to serve a variety of customer needs across the construction, industrial, oil & gas and paving industries: everything from Cat machine sales, rentals, parts and service, to comprehensive rebuild capabilities and custom product fabrication. For a full description of services and store hours, visit Holt Cat Little Elm.

About HOLT CAT®

HOLT CAT® sells, rents and services Caterpillar machines, engines, generator sets and trucks in a 118-county Texas territory spanning from the Red River to the Rio Grande. HOLT offers total machine and engine rebuild capabilities, sells used equipment around the world and fabricates its own line of land clearing equipment and HOLT Spray King® water tankers. HOLT is the dealer for Link-Belt Cranes in the Eastern half of Texas as well as the El Paso area. They are the dealer for AGCO/Challenger and Claas farm equipment for the Eastern half of Texas and portions of Arkansas and Missouri.

The Holt name has been associated with heavy equipment and Caterpillar for more than 100 years. Peter M. Holt, Chief Executive Officer of HOLT CAT, is the great-grandson of Benjamin Holt, who in 1904 developed the first successful track-type tractor which he named the “Caterpillar.” HOLT CAT has come to be synonymous with quality, integrity and commitment to customer service. The HOLT CAT team is committed to providing rock solid stability with superior products and services to heavy equipment and engine users from Brownsville to Texarkana, Texas.

Technical Announcement:
Appalachian Basin Energy Resources — A New Look at an Old Basin

USGSNew Geological Compilation Available for Resource Studies and Land-Use Planning

Appalachian coal and petroleum resources are still available in sufficient quantities to contribute significantly to fulfilling the nation’s energy needs, according to a recent study by the U.S. Geological Survey.

The Appalachian basin, which includes the Appalachian coalfields and the Marcellus Shale, covers parts of Alabama, Georgia, Kentucky, Maryland, New York, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia and West Virginia.

“The study we conducted is a modern, in-depth collection of reports, cross sections and maps that describe the geology of the Appalachian basin and its fossil fuel resources,” said USGS scientist Leslie Ruppert, the study’s lead editor.

Petroleum resources, including oil and natural gas, remain significant in the Appalachian basin. Although both conventional oil and gas continue to be produced in the Appalachian basin, most new wells in the region are drilled in shale reservoirs, such as the famous Marcellus and Utica Shale, to produce natural gas.

The Appalachian basin contains significant coalbed methane and high-quality, thick, bituminous coal resources although the resource is deeper and thinner than the coal that has already been mined.

Although this volume is not a quantitative assessment of all notable geologic and fossil fuel localities in the Appalachian basin, the selected study areas and topics presented in the chapters pertain to large segments of the basin and a wide range of stratigraphic intervals. This updated geologic framework is especially important given the significance of shale gas in the basin.

This volume discusses the locations of coal and petroleum accumulations, the stratigraphic and structural framework, and the geochemical characteristics of the coal beds and petroleum in the basin, as well as the results of recent USGS assessments of coal, oil and gas resources in the basin.

Many of the maps and accompanying data supporting the reports in this volume are available from chapter I.1 as downloadable geographic information system (GIS) data files about the characteristics of selected coal beds and oil and gas fields, locations of oil and gas wells, coal production, coal chemistry, total petroleum system (TPS) boundaries and bedrock geology. Log ASCII Standard (LAS) files for geophysical (gamma ray) wireline well logs are included in other chapters.

USGS is the only provider of publicly available estimates of undiscovered technically recoverable oil and gas and coal resources of onshore lands and offshore state waters. This study of the Appalachian basin will underpin energy resource assessments and may be found online. To find out more about USGS energy assessments and other energy research, please visit the USGS Energy Resources Program website, sign up for our Newsletter, and follow us on Twitter.

http://www.usgs.gov/newsroom/article.asp?ID=4163