Tag Archive for 'ABC'

Construction Input Prices Trend Lower in Jul

CEU2“Key input prices fell or were flat in all but one category in July and further downward pressure on input costs is likely to be reflected in next month’s report.” —ABC Chief Economist Anirban Basu.

PPI July 2015Prices for inputs to construction industries declined 0.1 percent in July after increasing 0.2 percent in June, according to the Aug. 14 producer price index release by the Bureau of Labor Statistics. Year-over-year prices were down 3 percent in July and have been down on an annual basis for each of the past eight months. Prices of inputs to nonresidential construction industries declined 0.3 percent on a monthly basis and are down 3.9 percent on a yearly basis.

“Key input prices fell or were flat in all but one category in July and it is important to note that further downward pressure on input costs is likely to be reflected in next month’s report, as well,” said Associated Builders and Contractors Chief Economist Anirban Basu.

“The state of affairs today is unprecedented,” said Basu. “Nonresidential construction spending has been recovering robustly in the U.S. in recent months—up more than 11 percent on a year-over-year basis. On top of that, the multifamily building boom continues in most major U.S. metropolitan areas.

“All things being equal, these circumstances should correspond with rising construction materials prices,” said Basu. “But as a reflection of how global the economy has become, America’s nonresidential construction recovery is taking place in the context of collapsing commodity prices. The latest round of commodity price decreases has been spawned by softening growth in China and ongoing increases in production of key inputs worldwide, including oil. However, this form of deflation should not be troubling to contractors. If anything, it will tend to boost profit margins for the average contractor, though falling commodity prices do not represent good news for construction firms heavily invested in oil and natural gas segments. These falling prices also imply slower increases in interest rates going forward, which will help extend the ongoing nonresidential construction recovery.”

Below are the key input prices for the month and the year.

  • Prices for plumbing fixtures remained flat on a monthly basis and are up 1.2 percent on a year-over-year basis.
  • Softwood lumber prices expanded 6.2 percent in July, but are 3.7 percent lower than a year ago.
  • Concrete product prices fell 0.1 percent in July, but are up 3.8 percent on a yearly basis.
  • Crude energy materials prices declined 6.2 percent in July and are down 37.8 percent on a year-over-year basis.
  • Fabricated structural metal product prices fell 0.7 percent for the month and have declined 0.4 percent on a year-over-year basis.
  • Natural gas prices declined 1.9 percent in July and are 38.4 percent lower than the same time one year ago.
  • Iron and steel prices were down 1.1 percent in July and are down 15 percent from the same time last year.
  • Prices for prepared asphalt, tar roofing, and siding fell 0.1 percent for the month and are down 0.4 percent on a year-ago basis.
  • Steel mill products prices fell 1 percent for the month and are 13.2 percent lower than one year ago.
  • Crude petroleum prices fell 12.3 percent in July and are down 48.8 percent from the same time one year ago.
  • Nonferrous wire and cable prices fell 1.3 percent on a monthly basis and are down 5.2 percent on a yearly basis.

To view the previous PPI report, click here

ABC Reports: Nonresidential Construction Spending Retains Momentum

CEU2“Today’s release represents the largest year-over-year growth during a calendar year’s first six months since the Census Bureau began tracking construction spending in 2002.” —ABC Chief Economist Anirban Basu.

Spending 8.3.15Nonresidential construction spending was unchanged on a month-over-month basis in June, but is up 11.5 percent on a year-over-year basis, according to a report released Aug. 3 by the U.S. Census Bureau. Nonresidential construction spending totaled $686.9 billion on a seasonally adjusted, annualized basis for the month and increased 9.8 percent during the year’s first half.

“Today’s release represents the largest year-over-year growth during a calendar year’s first six months since the Census Bureau began tracking construction spending in 2002 and serves as further proof of the recovery for nonresidential construction,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Despite the lack of growth on a monthly basis in June, along with the overall economy’s lukewarm growth, most contractors are markedly busier than they were a year ago. May’s nonresidential construction figure was revised upward by 2.6 percent and April’s by 1.4 percent; therefore, it is conceivable that June’s estimate will eventually be revised higher as well.

“Exactly half of the 16 nonresidential construction sectors experienced growth in June,” said Basu. “On a yearly basis, 15 of those 16 sectors have expanded. However, the one sector that failed to grow during the past year, power, happens to be the largest. Had power simply remained unchanged during hat time period—it’s down 16.5 percent largely because of the fall in oil prices—nonresidential construction spending would currently stand at its highest level ever.”

Eight of 16 nonresidential construction sectors experienced spending increases in June on a monthly basis:

  • Lodging-related construction spending was up 3.9 percent on a monthly basis and 42.2 percent on a year-over-year basis.
  • Spending in the water supply category expanded 12.2 percent from May and is up 12 percent on an annual basis.
  • Highway and street-related construction spending expanded 1.3 percent in June and is up 14.8 percent compared to the same time last year.
  • Amusement and recreation-related construction spending was up 10.2 percent on a monthly basis and is up 39.2 percent from the same time last year.
  • Communication-related construction spending fell 6.8 percent for the month, but is up 13.4 percent compared to June 2014.
  • Construction spending in the transportation category grew 2.3 percent on a monthly basis and has expanded 9.6 percent on an annual basis.
  • Sewage and waste disposal-related construction spending increased 1.6 percent for the month and has expanded 5.3 percent on a 12-month basis.
  • Public safety-related construction spending grew 2.5 percent on a monthly basis, but is down 3.1 percent on a year-over-year basis.

Spending in eight nonresidential construction subsectors fell in June on a monthly basis:

  • Education-related construction spending fell 0.2 percent for the month, but is up 2.1 percent on a year-over-year basis.
  • Power-related construction spending fell 0.9 percent for the month and has declined 16.5 percent from June 2014, the steepest decline for any nonresidential category.
  • Commercial construction spending fell 4.3 percent in June, but is up 7.6 percent on a year-over-year basis.
  • Health care-related construction spending fell 0.9 percent for the month, but is up 6.3 percent on a year-over-year basis.
  • Manufacturing-related construction spending fell 0.8 percent in June, but is up 62.1 percent compared to June 2014.
  • Office-related construction spending fell 1.1 percent in June, but is up 24.4 percent from the same time one year ago.
  • Conservation and development-related construction spending fell 5.8 percent for the month, but is up 6.5 percent on a yearly basis.
  • Religious spending fell 6.2 percent for the month, but is up 5 percent from the same time last year.

To view the previous spending report, click here.

ABC Reports: Nonresidential Fixed Investment Falls in Second Quarter

CEU2“In the first half of 2015, both the broader economy and nonresidential investment lost the momentum they had coming into the year.” ABC Chief Economist Anirban Basu.

GDP_Q2_2015Nonresidential fixed investment fell by 0.6 percent during the second quarter after expanding by 1.6 percent during the first quarter, according to the July 30 real gross domestic product (GDP) report by the Bureau of Economic Analysis (BEA). For the economy as a whole, real GDP expanded by 2.3 percent (seasonally adjusted annual rate) during the second quarter following a 0.6 percent increase during the year’s first quarter. Note that the first quarter estimate for nonresidential fixed investment was revised upward from -3.4 percent annualized growth.

“In the first half of 2015, both the broader economy and nonresidential investment lost the momentum they had coming into the year,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Rather than indicating renewed progress in terms of achieving a more robust recovery, today’s GDP release indicates that a variety of factors helped to stall investment in nonresidential structures. There are many viable explanations, including a weaker overall U.S. economy, a stronger U.S. dollar, decreased investment in structures related to the nation’s energy sector, soft public spending, and uncertainty regarding monetary policy and other abstracts of public policy. While the expectation is that the second half of the year will be better, unfortunately not much momentum is being delivered by the year’s initial six months.

“Perhaps the most salient facet of this GDP release was the revisions,” said Basu. “The BEA revised the first quarter estimate upward from -0.2 percent to 0.6 percent annualized growth. This is not surprising; many economists insisted that the economy did not shrink in the first quarter. However, the BEA also downwardly revised growth figures from the fourth quarter of 2011 to the fourth quarter of 2014. Over that period, GDP increased at an average annual rate of 2.1 percent, 0.3 percentage points lower than previously thought. These revisions could be a function of the agency’s ongoing effort to tackle residual seasonality, a pattern in which seasonal adjustments led to repeated first quarter slowdowns. It will take a few more quarters to understand the full impact of the improved seasonal adjustments.”

Performance of key segments during the first quarter:

  • Investment in nonresidential structures decreased at a 1.6 percent rate after decreasing at a 7.4 percent rate in the first quarter.
  • Personal consumption expenditures added 1.99 percent to GDP after contributing 1.19 percent in the first quarter.
  • Spending on goods grew 1.1 percent from the first quarter.
  • Real final sales of domestically produced output – minus changes in private inventories – increased 2.5 percent for the second quarter after a 2.5 percent increase in the first quarter.
  • Federal government spending decreased 1.1 percent in the second quarter after increasing by 1.1 percent in the first quarter.
  • Nondefense spending decreased 0.5 percent after expanding by 1.2 percent in the previous quarter.
  • National defense spending fell 1.5 percent after growing 1 percent in the first quarter.
  • State and local government spending grew 2 percent during the second quarter after a decrease of 0.8 percent in the first.

To view the previous GDP report, click here .

ABC Reports: June Construction Unemployment Rates Improve in 45 States from 2014

NR

Analysis by Bernard Markstein

Construction employment stalled nationally on a seasonally adjusted (SA) basis in June. However, as expected, not seasonally adjusted (NSA) employment increased from May. The result was that 38 states experienced a decline in their estimated NSA construction unemployment rate.

Construction activity and employment continues to improve from a year ago. Thus, on a year-over-year basis, the NSA construction unemployment rates for the country and 45 states were down in June.

For the first half of the year, SA construction jobs rose 105,000, while the industry added 262,000 jobs from June 2014 to June 2015 on an NSA basis.

The Census Bureau reported on July 1 that total SA nominal (current) dollar construction spending increased 0.8 percent in May. Nonresidential construction spending, which struggled in 2014, has advanced for four consecutive months. Total construction spending increased for six months straight.

The Top Five States

The five states with the lowest construction unemployment rates were:

  1. South Dakota*
  2. Nebraska*
  3. North Dakota
  4. Idaho and Montana (tie)

* Unemployment Rate for Construction and Mining

All of the top five states are in the same geographic region, although the Census Bureau places Idaho and Montana in a different census division (West North Central for Nebraska, North Dakota and South Dakota; Mountain for Idaho and Montana). Wyoming, which would fit in neatly with this group (part of the Mountain census division), was just out of the top five at number six (up from number eight in May).

Four of the top five states were also among the top five in May with a somewhat different order. South Dakota moved into the number one spot from being tied for second with North Dakota in May. Nebraska slipped into the second position from the first in May.

North Dakota fell to third place with the decline in its position, undoubtedly largely due to the slump in oil prices and the resulting slowdown in exploration and drilling new wells. Nonetheless, both the construction unemployment rate and the overall state unemployment rate are at a low level that other states would envy.

Fourth place was a tie between Idaho and Montana. For Idaho, June’s ranking was an improvement from its number seven position in May. Montana moved up from fifth place in May based on revised data (it had previously been in fourth place). Maryland, with a construction and mining unemployment rate,  took over Montana’s fourth place in May based on revised data (originally reported as number five) but fell to tenth place in June in a tie with Utah, which also held tenth place in May.

The Bottom Five States

The five states with the highest construction unemployment rates (from lowest to highest) were:

  1. New Mexico
  2. Rhode Island
  3. Georgia and West Virginia (tie)
  4. Mississippi

Three of the states with the five highest construction unemployment rates in May were among the five highest in June: Georgia, Mississippi and Rhode Island. For the second month in a row, Mississippi had the highest rate in the nation. On the positive side, the estimated construction unemployment rate for all 50 states fell below 10 percent for the first time since October 2014.

Georgia and West Virginia were tied for second highest in June. Georgia also had the second highest rate in May based on revised data (originally reported as third highest). West Virginia moved from tied with Connecticut and Missouri for eleventh highest in May to its tie with Georgia for second highest rate in June. West Virginia was one of five states with a year-over-year increase in their estimated construction unemployment rates and one of 12 states with an increase from their May rate. Among those 12 states, West Virginia along with New Hampshire had the largest monthly increase—1.6 percent.

Rhode Island moved from fifth highest in May based on revised data (originally reported as sixth highest) to fourth highest in June. New Mexico took Rhode Island’s fifth place position in June moving down from 17th highest in May.

New Jersey and South Carolina, which tied for third highest in May based on revised data, were sixth and seventh highest, respectively, in June. Alabama and California tied with South Carolina for seventh highest in June. In May, California’s construction unemployment rate was also seventh highest, while Alabama’s rate was sixth highest based on revised data (originally reported as fifth highest).

State_RankingRead more on ABC’s website.

Background

Associated Builders and Contractors (ABC) launched its state-by-state economic analysis earlier this year with the release of economist Bernard M. Markstein’s analysis of construction’s contribution to each state’s gross domestic product (GDP). ABC will be releasing Markstein’s next analysis of GDP data August 11, 2015

Unique to ABC, Markstein’s state-level construction unemployment estimate and analysis of state-level construction job markets for June is below. This analysis is produced monthy in addition to ABC’s existing national economic data and analysis. Background on how the data was derived and Markstein’s methodology is available on ABC’s website. 

New Wave of TV, Print, Radio & Digital Ads Target Members of Congress & General Public on Highway Trust Fund Fix

ee0d071a-4431-491a-ae5f-0d9154114fae1982 Reagan Gas Tax Proposal Highlighted

The Transportation Construction Coalition (TCC) and industry allies have launched a new television, radio, print advertising campaign to put increased pressure on Congress to fix the Highway Trust Fund (HTF), and boost federal highway and public transit investment.  The TCC is also utilizing digital ads asking commuters in key states to contact their congressmen and senators on the issue.

The effort highlights how conservative and tax-cutting champion President Ronald Reagan got it right when he said that “common sense” tells us that it’s less expansive to keep our transportation infrastructure in good repair than to let it crumble and have to rebuild.

Reagan also was on the money when he added that, wherever possible, assessing a fee on the people who benefit from a public service is “good tax policy” to pay for that service.

“Our highways were built largely with such a user fee – the gasoline tax,” Reagan said in a November 1982 radio address to the nation. “I think it makes sense to follow that principle in restoring them to the condition we all want them to be in.”

The 60-second television ad, sponsored by the TCC and the American Public Transportation Association (APTA), airs June 16-18 on Fox News and CNN inside Washington, D.C., and is scheduled to coincide with this week’s House Ways & Means and Senate Finance Committee hearings on the future of transportation financing.  Watch the ad.

The latest funding authorization for the highway and public transit program supported through the HTF expires July 31.  Congress continues to struggle in reaching agreement on a sustainable funding solution.

The TCC is also rolling out a 60-second radio ad featuring Reagan, which airs June 16-18 during morning and afternoon drive time on WTOP, D.C.’s top news-talk station.  Listen to the spot.

Complimentary, full-page TCC print ads will appear this week in Capitol Hill publications.  The ads call for an increase in the federal gas tax and note that nearly 90 percent of Republican and Democratic state legislators who voted to increase their state’s gas tax or equivalent during the last election cycle to fund transportation improvements were re-elected.  The TCC has also placed companion digital ads targeting congressional staff.

The TCC initiative extends beyond the Nation’s Capital and features digital advertising targeting voters in the states of these congressional and tax committee leaders:

  • House Ways & Means Committee Chairman Paul Ryan (R-Wis.)
  • House Speaker John Boehner
(R-Ohio)
  • Senate Finance Committee Chairman Orrin Hatch (R-Utah)
  • House Majority Leader Kevin McCarthy (R-Calif.)
  • Senate Majority Leader Mitch McConnell (R-Kentucky)
  • House Majority Whip Steve Scalise (R-La.)
  • Senate Minority Leader Harry Reid
(D-Nev.)
  • Senate Finance Committee Ranking Member Ron Wyden (D-Ore.)
  • House Minority Leader Nancy Pelosi (D-Calif.)
  • Tom Price Price (R-Ga.) Rep. Diane Black (R-Tenn.)
  • Todd Young (R-Ind.)
  • Richard Burr (R-N.C.)
  • Pat Toomey (R-Pa.)
  • Sen. Tim Scott (R-S.C.)

When clicked on the digital ads will take voters to a petition  that they can sign and have sent to their respective members of Congress.

The TCC says it plans to continue a wide-range of advertising and grassroots activities in the run up to the July 31 deadline to keep the pressure on Congress to fix the HTF and then pivot to passage of a long-term surface transportation bill.

Established in 1996 and co-chaired by the American Road and Transportation Builders Association and the Associated General Contractors of America, the 31 associations and labor unions that make up the TCC have a direct market interest in the federal transportation program.  TCC members include:

American Road & Transportation Builders Association (co-chair); Associated General Contractors of America (co-chair); American Coal Ash Association; American Concrete Pavement Association; American Concrete Pipe Association; American Council of Engineering Companies; American Subcontractors Association; American Iron and Steel Institute; American Society of Civil Engineers; American Traffic Safety Services Association; Asphalt Emulsion Manufacturers Association; Asphalt Recycling & Reclaiming Association; Associated Equipment Distributors; Association of Equipment Manufacturers; Concrete Reinforcing Steel Institute; International Slurry Surfacing Association; International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers; International Union of Operating Engineers; Laborers-Employers Cooperation and Education Trust; Laborers’ International Union of North America; National Asphalt Pavement Association; National Association of Surety Bond Producers; National Electrical Contractors Association;  National Ready Mixed Concrete Association; National Steel Bridge Alliance; National Stone, Sand and Gravel Association; National Utility Contractors Association; Portland Cement Association; Precast/Prestressed Concrete Institute; The Road Information Program; and United Brotherhood of Carpenters and Joiners of America.