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ABC Reports: Nonresidential Construction Adds Nearly 5,000 Jobs in November

CEU2“Nonresidential construction added nearly 5,000 jobs in November and the outlook remains positive.”—ABC Chief Economist Anirban Basu.

Employment November 2014The U.S. construction industry added 20,000 jobs in November, with nonresidential construction contributing 4,900 of them, according to the Bureau of Labor Statistics preliminary estimate released Dec. 5. October’s overall construction estimate was revised downward from 12,000 to 7,000 net new jobs and nonresidential construction lost 2,100 jobs in October, after revisions.

“Nonresidential construction added nearly 5,000 jobs in November and the outlook remains positive,” said Associated Builders and Contractors Chief Economist Anirban Basu. “It is important to note that the greatest constraint on nonresidential job growth may no longer be a lack of demand for construction services, but rather a lack of supply of sufficiently skilled workers. Growing demand for human capital coupled with tighter labor markets strongly suggests that industry wage pressures will expand in 2015, perhaps to the extent that margins will be rendered too thin for many firms, even in the face of rising demand for services.

“While the national construction unemployment rate expanded from 6.4 percent to 7.5 percent on a non-seasonally adjusted basis in November, this is primarily due to seasonal factors,” Basu explained. “The construction unemployment rate has historically expanded during the colder months of the year, and November’s figure should not be seen as a cause for concern.

“The U.S. economy has shifted into a higher gear,” said Basu. “A combination of surging stock prices, lower energy costs, rising consumer confidence, solid job creation, and improvement in the quality of jobs being added has helped move the economy closer to a sustained 3 percent rate of growth. For the most part, this represents good news for the nonresidential construction industry.”

According to the Bureau of Labor Statistics’ household survey, the national unemployment rate remained unchanged at 5.8 percent in November. The labor force once again expanded in October, growing by 119,000 persons. After shrinking in August and September, the labor force has now expanded in consecutive months. The labor force participation rate remained unchanged at 62.8 percent in November.

Construction employment for the month and the past year breaks down as follows:

  • Nonresidential building construction employment fell by 2,400 jobs for the month but is up by 9,500 jobs, or 1.4 percent, since November 2013.
  • Residential building construction employment expanded by 3,400 jobs in November and is up by 47,300 jobs, or 7.5 percent, on an annual basis.
  • Nonresidential specialty trade contractors added 7,300 jobs for the month and employment in that category is up by 47,400 jobs, or 2.2 percent, from the same time one year ago.
  • Residential specialty trade contractors gained 13,300 jobs in November and have added 75,500 jobs, or 4.8 percent, since November 2013.
  • The heavy and civil engineering construction segment lost 1,300 jobs in November and job totals are up by 33,200, or 3.7, percent on a year-over-year basis.

To view the previous employment report, click here

ABC Reports: Nonresidential Construction Spending Rebounds in October

CEU2“This month’s increase in nonresidential construction spending is far more consistent with the anecdotal information floating around the industry.”—ABC Chief Economist Anirban Basu.

Construction Spending November 2014Nonresidential construction spending bounced back in October, expanding 1 percent on a monthly basis and 4.3 percent year over year, according to a Dec. 2 release from the U.S. Census Bureau. Spending for the month totaled $611.8 billion on a seasonally adjusted, annualized basis. Additionally, the government revised the September spending figure up to $605.8 billion from $596.1 billion.

“This month’s increase in nonresidential construction spending is far more consistent with the anecdotal information floating around the industry, which generally indicates that firms are becoming busier and that backlog is expanding,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Although last month’s numbers for nonresidential construction spending and employment were disappointing and could have implied the nation’s nonresidential construction recovery is stalling, that is not the case.

“The outlook for 2015 remains upbeat,” said Basu. “The economy has gained momentum over the past six to seven months and that is consistent with more aggressive construction starts and spending during the year to come. Even as the economy has gained momentum, the Federal Reserve has remained extraordinarily accommodative due in part to benign inflation readings. Low interest rates combined with solid economic momentum likely mean expansion for the nonresidential construction industry during the year ahead.”

11 of 16 nonresidential construction subsectors posted monthly increases in spending.

  • Office-related construction spending grew by 2 percent in October and is up 16.3 percent from the same time one year ago.
  • Lodging construction spending is up 3.3 percent on a monthly basis and is up 15.9 percent on a year-over-year basis.
  • Conservation and development-related construction spending grew 4.6 percent for the month and is up 33.1 percent on a yearly basis.
  • Spending in the water supply category expanded 0.9 percent on a monthly basis, but is down 1.8 percent on a year-over-year basis.
  • Amusement and recreation-related construction spending expanded 2.2 percent in October and is up 1.4 percent from the same time last year.
  • Manufacturing-related spending expanded 3.4 percent on a monthly basis and is up 22.2 percent on an annual basis.
  • Health care-related construction spending expanded 0.6 percent for the month but is down 8.4 percent from the same time last year.
  • Education-related construction spending expanded 1.8 percent for the month and is up 3.6 percent on a year-over-year basis.
  • Construction spending in the transportation category expanded 2.7 percent on a monthly basis and has expanded 1.6 percent on an annual basis.
  • Highway and street-related construction spending expanded 1.2 percent in October and is up 0.1 percent compared to the same time last year.
  • Public safety-related construction spending expanded 11.6 percent on a monthly basis but is down 1.2 percent on a year-over-year basis.

Monthly spending in five nonresidential construction subsectors declined in October.

  • Commercial construction spending fell 2.2 percent for the month but has grown 9.1 percent on a year-over-year basis.
  • Communication construction spending declined 1.9 percent for the month and is down 9.4 percent for the year.
  • Religious construction spending fell 3.7 percent for the month and is down 4.6 percent from the same time last year.
  • Sewage and waste disposal-related construction spending declined 0.4 percent for the month and is down 0.2 percent on a 12-month basis.
  • Power construction spending fell 1 percent for the month but is 0.7 percent higher than at the same time one year ago.

To view the previous spending report, click here

ABC Reports: GDP Shows Increasing Positivity for Nonresidential Construction

CEU2-1“The improving confidence of consumers, business owners, and real estate developers, among others, suggests that additional momentum is likely, ” —ABC Chief Economist Anirban Basu.

GDP_Q3_2014-1Nonresidential fixed investment grew 5.5 percent in the third quarter after expanding 9.7 percent in the second quarter, according to the Bureau of Economic Analysis’ Oct. 30 gross domestic product (GDP) report. It has now expanded by greater than 5 percent in four of the past five quarters. In addition, investment in equipment increased 7.2 percent, while investment in nonresidential structures increased 3.8 percent.

Real gross domestic product (GDP) expanded 3.5 percent (seasonally adjusted annual rate) during the third quarter, following a 4.6 increase in the second quarter.

“It has been rare for the U.S. economy to record two consecutive good quarters since the recovery began in mid-2009,” said Associated Builders and Contractors Chief Economist Anirban Basu. “The dominant pattern has been one of a good quarter followed by a bad quarter. This lack of consistent momentum has also been seen with construction spending growth and in other leading indicators, such as the Architecture Billings Index and ABC’s own Construction Backlog Indicator.”

“However, the improving confidence of consumers, business owners, and real estate developers, among others, suggests that additional momentum is likely,” Basu said. As an example, the Consumer Confidence Index attained a seven-year high in October. The implication is that nonresidential construction spending should continue to recover, with growth continuing to be concentrated in privately financed segments.”

The following segments expanded during the third quarter and/or contributed to GDP.

  • Personal consumption expenditures added 1.2 percent to GDP after contributing 1.8 percent in the second quarter.
  • Spending on goods grew 11 percent after expanding 14.3 percent in the prior quarter.
  • Real final sales of domestically produced output, minus changes in private inventories, increased 4.2 percent after a 3.2 percent increase in the second quarter.
  • Federal government spending expanded by 10 percent following a 0.9 percent decrease in the prior quarter.
  • Nondefense spending expanded 0.5 percent after decreasing by 3.8 percent in the second quarter.
  • National defense spending expanded 16 percent after inching up 0.9 percent in the previous quarter.
  • State and local government spending expanded 1.3 percent during the third quarter after growing 3.4 percent in the second quarter.

To view the previous GDP report, click here.

ABC Reports: Nonresidential Construction Spending Slips for Second Consecutive Month

CEU2“September’s drop in nonresidential construction spending is disappointing given the growing momentum in the broader economy and the generally positive signals being sent by industry-specific leading economic indicators.”—ABC Chief Economist Anirban Basu.

Construction Spending Nov 2014Nonresidential construction spending slipped 1 percent in September but has still managed to expand 4.2 percent on a year-over-year basis, according to the Nov. 1 release from the U.S. Census Bureau. Spending for the month totaled $596.1 billion on a seasonally adjusted, annualized basis while the government slightly revised the August spending figure from $603.7 billion to $601.9 billion.

“September’s drop in nonresidential construction spending is disappointing given the growing momentum in the broader economy and the generally positive signals being sent by industry-specific leading economic indicators,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Based on a combination of these leading indicators—including ABC’s own Construction Backlog Indicator and the Architecture Billings Index—and the anticipated performance of the U.S. economy, nonresidential construction spending should re-establish an upward trajectory on a seasonally adjusted basis going forward.

“With national job creation accelerating recently and interest rates remaining ultra low, one would expect private construction to perform well during the quarters ahead, while growth in publicly funded spending will be much softer,” said Basu. “The industry should be further buoyed by the economy’s two consecutive quarters of respectable economic growth, something the U.S. economy has rarely achieved during the current recovery.”

Only five of 16 nonresidential construction subsectors posted increases in spending in September on a monthly basis.

  • Office-related construction spending grew 2.4 percent in September and is up 15.7 percent from the same time one year ago.
  • Lodging construction spending is up 4.7 percent on a monthly basis and is up 14.7 percent on a year-over-year basis.
  • Conservation and development-related construction spending grew 4.1 percent for the month and is up 31.7 percent on a yearly basis.
  • Commercial construction spending gained 1.3 percent for the month and has grown 12.3 percent on a year-over-year basis.
  • Spending in the water supply category expanded 1.1 percent on a monthly basis, but is down 1.6 percent for the year.

Spending in 11 nonresidential construction subsectors declined in September.

  • Amusement and recreation-related construction spending lost 0.8 percent in September, but is up 0.6 percent from the same time last year.
  • Manufacturing-related spending fell 1.3 percent on a monthly basis, but is up 16.4 percent on a year-over-year basis.
  • Communication construction spending declined 0.7 percent for the month and is down 12.8 percent from the same time last year.
  • Religious spending fell 3.1 percent for the month, but is up 2.6 percent from the same time last year.
  • Sewage and waste disposal-related construction spending declined 2.4 percent for the month, but has expanded 1.1 percent on a 12-month basis.
  • Health care-related construction spending fell 0.9 percent for the month and is down 7.5 percent on a yearly basis.
  • Education-related construction spending fell 0.1 percent for the month, but is up 7.1 percent on a year-over-year basis.
  • Construction spending in the transportation category fell 1.1 percent on a monthly basis, but has expanded by 1.2 percent on an annual basis.
  • Highway and street-related construction spending fell 3.6 percent in September and is down 1.7 percent compared to the same time last year.
  • Public safety-related construction spending lost 2.3 percent on a monthly basis and is down 11.1 percent on a year-over-year basis.
  • Power construction spending fell 3.1 percent for the month, but is 2 percent higher than at the same time one year ago.

To view the previous spending report, click here.

ABC Reports: Construction Materials Prices Inch Down in September

CEU2“The decline in oil prices has been simply stunning and is largely in response to growing evidence of weakness in Europe.”—ABC Chief Economist Anirban Basu.

PPI_10 15 2014Construction materials prices inched down 0.1 in September, but rose 1.6 percent compared to the same time last year, according to the U.S. Department of Labor’s Oct. 15 Producer Price Index. Prices for inputs to construction industries have remained unchanged from June to August—the longest such period since the price index for construction inputs began in 1986. Inputs to nonresidential construction fell 0.2 percent for the month, but were 1 percent higher than in September 2013.

Crude energy materials prices declined 1 percent in September and are 7.9 percent lower than one year ago. Natural gas prices climbed 4 percent in September after decreasing in the three previous months. However, on a year-over-year basis, natural gas prices have expanded for 22 consecutive months.

“The decline in oil prices has been simply stunning and is largely in response to growing evidence of weakness in Europe,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Forecasts of European economic performance are seemingly being downgraded on a daily basis, including forecasts of Germany’s economy, which heretofore has been a reasonably strong performer.”

“Without the decline in oil prices, which could fall even further looking ahead, materials prices in the aggregate would not have decreased in September,” said Basu. “In fact, a number of materials prices actually rose during the month, including iron and steel (0.5 percent) and softwood lumber (2.7 percent). Stakeholders also should note that the U.S. dollar has been rising for much of 2014, which has a tendency to suppress materials price increases.”

The following materials prices increased in September.

  • Softwood lumber prices expanded 2.7 percent and are 10.2 percent higher than one year ago.
  • Prices for plumbing fixtures expanded 0.1 percent in September and are up 3.1 percent on a year-over-year basis.
  • Steel mill products prices rose 0.1 percent for the month and are 4.7 percent higher than one year ago.
  • Nonferrous wire and cable prices grew 0.1 percent on a monthly basis, but are unchanged from one year ago.
  • Prices for prepared asphalt, tar roofing, and siding expanded 0.2 percent for the month, but are down 9.8 percent on a year-ago basis.
  • Iron and steel prices expanded 0.5 percent in September and are up 4.6 percent from the same time last year.
  • Natural gas prices expanded 4 percent in September and are 9.9 percent higher than one year ago.

Four of the 11 key construction inputs did not experience price increases for the month.

  • Concrete products prices fell 0.3 percent in September, but are up 3.6 percent on a year-over-year basis.
  • Fabricated structural metal products remained flat for the month and have expanded 1.9 percent on a year-over-year basis.
  • Crude petroleum prices fell 3.9 percent in September and are down 15.5 percent from the same time last year.
  • Crude energy materials prices fell 1 percent in September and are 7.9 percent lower year over year.

To view the previous Producer Prices Index report, click here