Tag Archive for 'ABC'

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

ABC Reports: Construction Owner Confidence Rises During First Half Of ’14

cci1The Associated Builders and Contractors (ABC) Construction Confidence Index (CCI) increased across all three indices in the first half of 2014. The CCI reflects construction industry prospects using three measured categories – revenues, profit margins and hiring. Each index now stands at a post-recession high, implying that nonresidential construction’s recovery, already robust, is positioned to continue into the year ahead.

During the first six months of 2014 (readings above 50 indicate growth)

* Sales expectations rose from 63.2 to 68.2;

* Profit margin expectations expanded from 57.5 to 60.3;

* Staffing level intentions moved higher from 62.2 to 65, indicating an acceleration in hiring
 going forward.

Nonresidential Construction Confidence up for Past 18 MoAnalysis

2014 1st Half CCI Bar Graph“A number of factors are aligning to boost the performance of the nonresidential construction industry and the confidence of construction business owners,” said ABC Chief Economist Anirban Basu. “August notwithstanding, employment growth has been solid, including in segments such as professional/business services and leisure/hospitality, which in turn is helping to trigger new construction in office and lodging segments. The industry’s confidence has also been boosted by low interest rates, easing credit conditions for developers, expanded consumer spending and stabilizing state and local government revenues, which in many cases is attributable to a combination of higher retail sales and property tax revenue.

“While industry momentum has improved with the weather and the current survey indicates that the pace of progress will continue to accelerate into 2015, do not expect a boom,” cautioned Basu. “The bulk of respondents believe that improvement in sales, profit margins and staffing levels will be gradual moving forward. Moreover, while nearly three-quarters of respondents expect sales volume to increase during the months ahead, fewer than half expect an improvement in profit margins, indicating that the marketplace remains unusually competitive from a pricing perspective.”

*CCI is a diffusion index. Readings above 50 indicate growth, while readings below 50 are unfavorable. The following chart reflects the distribution of responses to ABC’s most recent surveys.

CCIq22012tableUpdatedTo participate in CCI as part of the Construction Backlog Indicator survey email cooper@abc.org

 

ABC Reports: Nonresidential Construction Spending Falters in August

CEU2“After a significant acceleration in spending in July, August’s report depicts a steady but unspectacular recovery.”—ABC Chief Economist Anirban Basu.

Construction_Spending_10 1Nonresidential construction spending slipped in August, according to an Oct. 1 release from the U.S. Census Bureau. Nonresidential construction spending shrank 1.2 percent on a monthly basis in August, but has still managed to expand 6 percent on a year-over-year basis. Spending for the month totaled $603.7 billion on a seasonally adjusted, annualized basis. The government also revised the July spending figure down from $617.8 billion to $611.3 billion.

“This is why it is never a good idea to get excited about one month of data,” said Associated Builders and Contractors Chief Economist Anirban Basu. “After a significant acceleration in spending in July, August’s report depicts a steady but unspectacular recovery. Based on various industry surveys, including ABC’s own confidence and backlog indicators, the steady pace of recovery will continue.

“Macroeconomic fundamentals remain promising for growth moving forward,” said Basu. “Job growth has been reasonably steady during the past 12 months and the quality of jobs added to the economy has improved during the course of the current year, which helps explain the ongoing recovery in office-related spending. Federal Reserve policy remains accommodative and interest rates remain benign, which will help support business investment, including in construction, going forward. Consumer spending also should help prompt additional construction, including in the lodging and amusement/recreation categories.”

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

  • Office-related construction spending grew 1.1 percent in August and is up 18.9 percent from the same time one year ago.
  • Manufacturing-related spending grew 1.7 percent on a monthly basis and is up 14.5 percent on an annual basis.
  • Lodging construction spending is up 0.9 percent on a monthly basis and is up 10.2 percent on a year-over-year basis.
  • Amusement and recreation-related construction spending grew 0.9 percent on a monthly basis and is up 3 percent from the same time last year.
  • Communication construction spending expanded 3.4 percent for the month, but is down 10.5 percent on a year-over-year basis.
  • Religious spending grew 0.9 percent for the month and is up 1.4 percent from the same time last year.
  • Sewage and waste disposal-related construction spending gained 0.8 percent for the month and has grown 3.5 percent on a 12-month basis.

Spending in nine nonresidential construction subsectors declined in August.

  • Conservation and development-related construction spending fell 2.5 percent for the month, but is up 19.8 percent on a yearly basis.
  • Health care-related construction spending fell 0.6 percent for the month and is down 6.6 percent for the year.
  • Education-related construction spending fell 2 percent for the month and is down 1.9 percent on a year-over-year basis.
  • Spending in the water supply category fell 4 percent from July and is 1.8 percent lower than at the same time last year.
  • Construction spending in the transportation category fell 2.9 percent on a monthly basis, but has expanded 3 percent on an annual basis.
  • Highway and street-related construction spending fell 0.6 percent in August and is down 0.2 percent compared to the same time last year.
  • Public safety-related construction spending fell 5 percent on a monthly basis and is down 6 percent on a year-over-year basis.
  • Power construction spending fell 3.4 percent for the month, but is 16.3 percent higher than at the same time one year ago.
  • Commercial construction spending declined 3.1 percent in August, but is up 9.4 percent on a year-over-year basis.

To view the previous spending report, click here