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ABC Reports: Construction Employment Falters in August

ABC The U.S. construction industry lost 6,000 net jobs in August according to an analysis of U.S. Bureau of Labor Statistics (BLS) data released today by Associated Builders and Contractors (ABC). BLS also downwardly revised July’s estimate from 14,000 net new jobs to 11,000 net new jobs meaning that the construction industry has lost 25,000 net jobs since April after adding 68,000 through the first three months of 2016.

The nonresidential sector lost 10,700 net jobs in August after adding 9,600 jobs in July (revised down from 11,500). Employment in the heavy and civil engineering sector fell for the fourth time in five months, declining by 6,500 jobs on net, an indication of still weak infrastructure investment. The construction industry’s unemployment rate rose to 5.1 percent in August, but is still 3.4 percentage points lower than it was at the beginning of 2016.

“Today’s downbeat employment data came less than twenty-four hours after yesterday’s relatively upbeat nonresidential construction spending report,” said ABC Chief Economist Anirban Basu. “This pattern of good news followed by bad news is nothing new and continues to paint a confusing picture for nonresidential construction activity in the U.S.

“Most contractors continue to report decent backlog and although profitability remains a challenge, margins are thicker than they were several years ago,” said Basu. “Construction firms continue to complain about a lack of appropriately trained workers and construction wage costs are rising. These are all signs of an industry that remains busy.

“However, the data are also consistent with the notion that the pace of expansion in nonresidential construction activity has slowed,” warned Basu. “Nonresidential construction spending has expanded by less than 2 percent over the past year. The biggest culprit continues to be a lack of public sector capital spending on infrastructure, whether in the form of roads or water systems. Survey data regarding commercial real estate lending standards indicate that lending standards are beginning to tighten. While spending in office, lodging, and commercial categories has expanded significantly over the past year, the pace of growth is beginning to be constrained by a combination of regulatory pressures and growing concerns regarding overbuilding in certain key communities and product segments.

“The other consideration is that job growth remains rapid in a number of other key economic segments, including in e-commerce/distribution, retail, and a host of services,” said Basu. “This may be tempting some construction workers away from the industry, helping to explain continued low industry unemployment despite the job losses experienced in recent months.”

The national unemployment rate remained unchanged for a third consecutive month and stands at 4.9 percent. The labor force expanded by 176,000 persons in August and has grown by roughly one million persons over the past three months. Labor force participation stands at 62.8 percent.

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ABC Reports: Nonresidential Construction Growth on Pace with Strong July Jobs Report

1291931467352794367The U.S. construction industry has rebounded strongly, adding 14,000 net new jobs in July according to an analysis of Bureau of Labor Statistics data released today by Associated Builders and Contractors (ABC). This gain comes after the construction sector lost a combined 27,000 jobs from April to June. The construction industry’s unemployment rate inched lower in July, shedding a tenth of a percentage point to reach 4.5 percent, the industry’s lowest unemployment rate since October 2006.

The nonresidential sector accounted for a majority of July’s gains, adding 11,500 net new jobs. The residential sector remained stagnant for the month, adding only 700 net new positions. Heavy and civil engineering employment, which lost 8,800 jobs from January to June, experienced a modest rebound in July by adding 1,900 net new jobs.

“After several months of disappointing construction spending and employment data, today’s release was most welcome,” said ABC Chief Economist Anirban Basu. “If there is a slowdown in construction, it appears to be in residential as opposed to nonresidential activity. Today’s release provides evidence that the nonresidential construction recovery has not yet stalled.

“While hiring in July was strong both in the broader economy and in key nonresidential construction segments, ongoing job creation exacerbates the issue of rampant skilled labor shortage,” said Basu. “The construction employment rate is now down to 4.5 percent. The implication is that wage pressures continue to build. Therefore, contractors will likely need to more aggressively pass along cost increases to purchasers of construction services in order to simply maintain their current level of profitability.

“For now, America’s economic recovery remains in place,” said Basu. “Not only does the economy continue to add jobs, but labor force participation has begun to rise again. This should position America’s ongoing consumer-led expansion to continue, creating demand for commercial construction and other forms of construction in the process.”

The economy-wide unemployment rate remained unchanged at 4.9 percent. The nation’s labor force expanded by 407,000 persons for the month. This represents the largest growth for the month of July since the labor force expanded by 587,000 persons in July 1996.

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Additional ABC Economic Analysis:

Construction Spending

Construction Employment

 

ABC Reports: Nonresidential Construction Spending Down Again in June, First Annual Decline Since 2013

1291931467352794367Nonresidential construction spending dipped 1 percent in June and has now contracted for three consecutive months according to analysis of U.S. Census Bureau data released today by Associated Builders and Contractors (ABC). Nonresidential spending, which totaled $682 billion on a seasonally adjusted, annualized rate, has fallen 1.1 percent on a year-over-year basis, marking the first time nonresidential spending has declined on an annual basis since July 2013.

“On a monthly basis, the numbers are not as bad as they seem, as May’s nonresidential construction spending estimate was revised higher. However, this fails to explain the first year-over-year decline in nearly three years,” said ABC Chief Economist Anirban Basu. “There are many forces at work, most of them negative, with the noteworthy exception of construction materials prices, which are down on a year-over-year basis. To the extent that savings are being passed along to purchasers of construction services, spending would appear lower in dollar terms than when measured in physical terms such as square footage.

“Thanks in part to the investment of foreign capital in America, spending related to office space and lodging are up by more than 16 percent year-over-year,” said Basu. The global economy is weak, and international investors are searching for yield and stability. U.S. commercial real estate has become a popular destination for foreign capital. However, the weakness of the global economy may also help explain the decline in manufacturing-related construction spending of nearly 5 percent for the month and more than 10 percent year-over-year.

“Though many contractors continue to report extensive backlog, the data suggest that average firm backlog may begin to retrench,” warned Basu. “The only significant driver of economic growth in America presently is consumer spending. Corporate profits remain stagnant and business investment remains underwhelming. Public sector spending does not appear positioned to accelerate anytime soon despite the passage of a federal highway bill last year.”

Precisely half of the 16 nonresidential subsectors expanded in June. Two of the largest subsectors—manufacturing and commercial—experienced significant contractions in June, however, and were responsible for a majority of the dip in spending.

Tepid spending by public agencies also continues to shape the data. Despite a monthly pick-up in spending, water-supply construction spending is down 14 percent on a year-over-year basis. Public safety construction spending is down 8.4 percent from a year ago, sewage and waste disposal by nearly 15 percent, highway and street by about 6 percent, education by 4 percent and transportation by more than 3 percent.

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To see more visit:

http://www.abc.org/NewsMedia/ConstructionEconomics/ConstructionEconomicUpdate/tabid/270/categoryid/46/Default

Get Ready to Vote

Baby & GTraditionally August is hot, humid, the vacation month, the yellow-cone-traffic-jamb-detour season; long weekends; yard work; painting; planning; fixing. It’s a busy time for everyone especially the construction industry. Is it as busy as it should be; needs to be?

By this time we know who is running for the presidency and what they are saying they will do. It’s not only the presidential who are trying to convince us they are what we needs it’s also people running for congress the house and the senate.

I recently received a press release from the Associated Builder and Contractors, ABC, which I would normally have run as a new item but because November is approaching faster than the end of summer I thought I’d share it with you now.

Construction Labor Force Shrinks, Job Numbers Flat

Labor Market Dynamics Cause for Concern

Despite a broader U.S. labor market rebound in June, the construction industry failed to add jobs for a third consecutive month, according to an analysis of today’s U.S. Bureau of Labor Statistics report by Associated Builders and Contractors (ABC). The construction industry’s employment level remained essentially unchanged in June.  

While nonresidential specialty trade contractors collectively added 3,700 net new positions, nonresidential builders shed 1,300 positions, and heavy and civil engineering contractors reduced staffing levels by another 3,900. Residential builders trimmed their employment total by 2,400 in June, while residential specialty trade contractors added 4,700 positions. 

“The construction industry unemployment rate declined to 4.6 percent in June from 5.2 percent the previous month, but not for the right reasons,” said Anirban Basu, ABC’s chief economist. “The overall national unemployment rate rose in June as labor force participation edged higher. However, the size of the construction industry labor force shrank. This may be an indication that as other segments of the U.S. economy continue to add jobs, a growing number of construction workers and construction jobseekers are shifting to other industries.  There are many implications associated with this pattern, including relatively faster wage growth despite the recent flattening in nonresidential construction spending. 

“As has been the case for many months, the most significant sources of weakness in construction activity and hiring relate to public spending,” said Basu. “Despite the passage of a federal highway spending bill late last year, heavy and civil engineering contractors, many of whom are engaged in work on roads and bridges, have been trimming employment. Not only did this segment shed jobs in June, but employment in this sector is slightly less than it was a year ago.

“The Bureau of Labor Statistics reported this morning that the nation added 287,000 net new jobs in June, led by job growth in leisure, healthcare, professional/business services, retail and finance. The information sector also added jobs as striking Verizon workers returned to work. Given the recent rise in oil prices, construction industry stakeholders may be speculating that some workers may have left the industry for the energy production sector,” said Basu

Employment_7_8_16 Employment_Chart 2 7_8_16There are only days left until the election. The presidential election is important but so are all the elections. Take time to understand what the representatives you vote for stand for; believe in; support.

Our highways and infrastructure are crumbling; we need people in congress who understand the importance of updating, repairing, replacing and maintaining these resources.

In November VOTE, but vote intelligently.

ABC Reports: Construction Material Prices Rise Month-to-Month, Remain Historically Low

Construction input prices expanded on a monthly basis for the second consecutive month in April, increasing by 0.5 percent according to an analysis of the Bureau of Labor Statistics (BLS) Producer Price Index released today by Associated Builders and Contractors (ABC). The two-month growth streak follows nine consecutive months during which construction input prices fell and construction input prices remain 2.9 percent below their April 2015 levels.

Prices have now decreased on a year-over-year basis for seventeen consecutive months. Nonresidential construction inputs behaved similarly, expanding 0.5 percent month-over-month but falling 3.1 percent year-over-year.

“Despite the end of month-to-month materials price decreases, prices remain low by historic standards and will likely continue to do so for the foreseeable future,” said ABC Chief Economist Anirban Basu. “Commodity prices, including oil prices, have been edging higher lately in response to a number of potentially temporary phenomena, including a weakening U.S. dollar. Coming into the year, the presumption among many market participants was that U.S. interest rates would rise meaningfully, thereby increasing the value of the dollar. Contrary to expectations, interest rates have not risen significantly, and the dollar has been weakening in response.

“That has helped to set the stage for the recent bounce-back in oil and certain other commodity prices,” said Basu. “Other factors have not been as supportive, including a still-weak global economy. Global economic weakness is likely to persist, and the dollar may begin to strengthen again. This means that construction firm managers should not assume that oil and other prices will rise steadily. In fact, reversals in commodity prices remain quite possible. While oil prices have risen sharply since lows achieved earlier this year, copper, natural gas and other prices have expanded only modestly. The next materials price report could easily show further inflation. The story of inexpensive materials will continue to be told.”

Eight key input prices rose in April on a monthly basis:

Crude petroleum prices expanded 17.6 percent from March 2016 but are down 22.4 percent from April 2015.

Unprocessed energy material prices rose 9 percent on a monthly basis but fell 18.2 percent on a year-ago basis.

Prices for steel mill products are up 2 percent on a monthly basis but down 11.3 percent on a yearly basis.

Iron and steel prices expanded 4.9 percent month-over-month but declined 8.6 percent year-over-year.

Softwood lumber prices grew 2.7 percent for the month and 1.8 percent from April 2015.

Concrete product prices expanded by 0.7 percent month-over-month and are up 3.1 percent year-over-year.

Natural gas prices increased 8.4 percent for the month but are down 25.7 percent from the same period one year ago.

Fabricated structural metal prices products rose 0.2 percent month-over-month but decreased 2 percent year-over-year.

Three key input prices declined on a monthly basis:

Prices for prepared asphalt and tar and roofing and siding products fell by 1.9 percent from March 2016 and are down 1.5 percent from April 2015.

Prices for plumbing fixtures and fittings fell 0.1 percent for the month but are up 0.1 percent from the same time last year.

Nonferrous wire and cable prices fell 0.3 percent on a monthly basis and 6.1 percent on a yearly basis.

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Additional ABC Economic Analysis:
Construction Spending
Construction Employment
Producer Price Index
Economic Growth (GDP)
ABC Economic Reports:
Construction Backlog Indicator (CBI)
Construction Confidence Index
State-Level Reports