Tag Archive for 'ABC'

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ABC Reports: Nonresidential Construction Spending Expands in April

CEU2“The year-over-year advance of 3.9 percent seems to realistically capture the rate of improvement in nonresidential construction spending.”—ABC Chief Economist Anirban Basu.

Spending 6 2Nonresidential construction spending inched up in April according to the June 2 release by the U.S. Census Bureau. This is the second consecutive month spending has increased following March’s upwardly revised spending report. Nonresidential construction spending expanded by 0.4 percent on a monthly basis in April and has risen 3.9 percent on a year-over-year basis. Spending for the month totaled $570.6 billion on a seasonally adjusted, annualized basis.

“Unsurprisingly, nonresidential construction spending has improved with the weather,” said Associated Builders and Contractors Chief Economist Anirban Basu. “As a result of the unusually harsh winter weather, spending declines appeared large during the winter months and subsequent monthly gains have perhaps been a bit exaggerated as well. While the monthly numbers may be skewed, the year-over-year advance of 3.9 percent seems to realistically capture the rate of improvement in nonresidential construction spending.”

“The U.S. economy has recovered its momentum since the first quarter, suggesting that nonresidential construction’s steady recovery will remain in place,” said Basu. “Indeed, measures of business confidence have improved significantly and there are indications that capital spending is set to accelerate.”

Ten of 16 nonresidential construction subsectors posted increases in spending in April.

•Lodging construction spending is up 1.9 percent on a monthly basis and is up 16.9 percent on a year-over-year basis.

•Office-related construction spending grew by 1.7 percent in April and is up 20 percent from the same time one year ago.

•Construction spending in the transportation category expanded 3.4 percent on a monthly basis and has expanded 8 percent on an annual basis.

•Religious spending grew 1.8 percent for the month but is down 5.9 percent from the same time last year.

•Education-related construction spending gained 2.7 percent for the month and is up 2.9 percent on a year-over-year basis./p>

•Commercial construction spending rose 1.2 percent in April and is up 5.9 percent on a year-over-year basis.

•Sewage and waste disposal-related construction spending gained 4 percent for the month but has fallen 5.5 percent from the same time last year.

•Amusement and recreation-related construction spending expanded 4.4 percent on a monthly basis and is up 3.2 percent from the same time last year.

•Health care-related construction spending grew 0.9 percent for the month, but is down 6.2 percent on a year-over-year basis.

•Conservation and development-related construction spending expanded by 3.6 percent for the month and is up 19.7 percent on an annual basis.

Spending in six nonresidential construction subsectors declined in April.

•Spending in the water supply category fell 0.2 percent on the month and is down 12.8 percent from the same time last year.

•Manufacturing-related spending fell 1.1 percent on a monthly basis, but is up 6.7 percent on an annual basis.

•Highway and street-related construction spending fell 1.1 percent in April, but is up 4.8 percent compared to the same time last year.

•Communication construction spending was down 11.7 percent for the month but is up 21 percent from the same time one year ago.

•Public safety-related construction spending fell 0.9 percent on a monthly basis and has declined 12.4 percent on a year-over-year basis.

•Power construction spending dipped 1.2 percent for the month and was 1.6 percent lower than the same time one year prior.

To view the previous Spending report, click here

ABC Reports: Nonresidential Construction Backlog Slides in Icy First Quarter

ABC Harsh winter weather helped produce a 2.8 percent decline in Associated Builders and Contractors’ (ABC) Construction Backlog Indicator (CBI) during 2014’s first quarter. The weather also impacted construction starts, architectural billings and many other construction-related metrics. Overall, CBI now stands at 8.1 months—down from the 8.3 months in the previous quarter, but up from 7.9 months a year ago.

“Despite a decline in overall backlog, only one of three industry segments, commercial/institutional, saw a decrease in backlog during the first quarter,” said ABC Chief Economist Anirban Basu. “Retailers and other commercial actors have been seeking to build cash reserves rather than to expand operational capacity, which helps explain the decline. However, second quarter business spending appears to be on the rise. Many companies are flush with cash and small business confidence is improving, which means commercial backlog is expected to expand during 2014’s second quarter and likely beyond.

“Regionally, the West, which features many of the states hardest hit by recession, including Arizona, California and Nevada, was the only region to experience expanding backlog,” said Basu. “The South, which includes rapidly growing states like Texas and Florida, continues to post the lengthiest average backlog, while the Middle States region, which includes communities with highly constrained public budgets like Chicago and Detroit, has the shortest construction backlog.

“Firms in three of the four size categories experienced an increase in average contractor backlog,” said Basu. “Larger firms, which generally have the greatest access to capital and therefore are more likely to be able to take on projects, continue to enjoy the lengthiest backlog. Backlog among smaller firms is roughly where it was at the end of 2011, leading many of those firms to offer bids with low profit margins in an attempt to line up additional work.

“Nonresidential construction economic indicators have not been particularly strong thus far in 2014,” said Basu. “After rising only sporadically in 2013, overall nonresidential construction spending fell for the fourth consecutive month in March.  However, the first quarter’s bitter weather likely pushed additional construction into subsequent periods, suggesting that construction spending and CBI are poised to expand during ensuing quarters.”

Regional Highlights

  • Average backlog declined in three of four regions during the first quarter.
  • While the South experienced the sharpest downturn in backlog, it also continues to boast the lengthiest backlog of all four major regions.
  • The West posted the largest gain in average contractor backlog on both a quarterly and year-over-year basis largely because California, Arizona, Nevada, Washington state and Oregon are among the most rapidly recovering states.

Industry Highlights

  • Despite a decline in overall backlog, only one of three industry segments, commercial/institutional, saw a decrease in backlog during the first quarter.
  • Backlog in the infrastructure segment ended a three-quarter losing streak and is now approaching 8 months.
  • Although backlog in the heavy industrial segment is rising, the reading for this segment remains the lowest of the three segments; however, manufacturing capacity utilization has been rising recently, implying that heavy industrial backlog is likely to expand more rapidly during the next several quarters.

Highlights by Company Size

  • Larger firms with annual revenues above $100 million continue to report the lengthiest backlog at 11.7 months–the second largest reading this category has seen.
  • Firms with $50 million to $100 million in annual revenue are the second most successful in terms of contracted work, with backlog at 10.69 months, although their average backlog is down from 11.52 months last quarter.
  • Smaller firms experienced a half-month decline in backlog during the first quarter but still enjoy a higher backlog than a year ago at 7.16 months.

To read more about the latest CBI, click here.

ABC Reports: Construction Materials Prices Up 0.5 Percent in March

CEU2“Despite the increase in materials prices, this report does not signal a period of much higher inflation.” —ABC Chief Economist Anirban Basu.

PPI_4 11 14Construction materials prices expanded 0.5 percent in March and are up 1.1 percent from March of last year, according to the U.S. Department of Labor’s April 11 producer price index release. Nonresidential construction materials prices are up 0.4 percent for the month and are 1 percent higher than the same time one year ago.

“Despite the increase in materials prices, this report does not signal a period of much higher inflation,” said Associated Builders and Contractors Chief Economist Anirban Basu. “While it is true that there were significant increases in overall monthly inflation for both the broader economy and for construction, only a handful of categories were actually associated with a meaningful uptick in prices.”

Overall, the nation’s wholesale goods prices fell 0.1 percent in March but are up 1.7 percent year over year. Crude energy materials prices fell 6.8 percent in March but are still 13.6 percent higher than one year ago, and have expanded by 34.1 percent through the first three months of 2014.

“With respect to the broader economy, much of the inflation was related to food, which likely is a result of meteorological impacts,” said Basu. “With respect to construction, only three of 11 categories actually experienced increasing prices for the month. Given modest projections for both global and national economic growth, it is unlikely that significant inflationary pressures will be experienced during the month ahead with respect to most construction materials prices.”

The following materials prices increased in March.

Nonferrous wire and cable prices gained 0.1 percent in March but are down 2.7 percent from one year ago.

Concrete products prices expanded 0.3 percent in March and are up 3.9 percent from one year ago.

Prices for prepared asphalt, tar roofing, and siding expanded by 1.1 percent for the month and are up 0.1 percent from one year ago.

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

Iron and steel prices fell 1.7 percent in March but are up 1.3 percent from the same time last year.

Natural gas prices fell 10.9 percent in March but are 48.5 percent higher than one year ago.

Crude energy prices fell 6.8 percent in March but are 13.6 percent higher than one year ago.

Steel mill products prices shed 1.1 percent for the month but are 1.4 percent higher than one year ago.

Crude petroleum prices fell 6.4 percent in March but are up 3.9 percent from March 2013.

Prices for plumbing fixtures shed 0.8 percent for the month but are up 1.9 percent from the same time last year.

Fabricated structural metal product prices are down 0.2 percent for the month but have risen 0.5 percent from one year ago.

Softwood lumber prices fell 0.8 percent in March and are 2.1 percent lower than one year ago.

To view the previous PPI report, click HERE

ABC Reports: Jobs Report Meets Expectations In March

CEU2“The 6,700 nonresidential construction jobs added in March demonstrate the growth we expect in the second quarter of 2014.” —ABC Chief Economist Anirban Basu.

Employment_4 4The U.S. construction industry gained 19,000 jobs in March and the construction unemployment rate fell to 11.3 percent (non-seasonally adjusted), according to the April 4 employment report by the U.S. Department of Labor (DOL). Nonresidential construction segments added 6,700 jobs in March, a marked improvement from the 2,800 jobs (revised) added in February. The improvement led the construction unemployment rate to fall from 12.8 percent in February 2014 and 14.7 percent in March 2013.

The residential sector continued to build momentum, adding 9,100 jobs for the month. Heavy and civil engineering added 3,200 jobs in March and has added 22,100 jobs in the past 12 months.

“The 6,700 nonresidential construction jobs added in March demonstrate the growth we expect in the second quarter of 2014,” said Associated Builders and Contractors Chief Economist Anirban Basu. “The colder than normal winter has been particularly cruel to the construction industry, and its departure should bring accelerated job growth.

“While it is promising to see the construction unemployment rate shed more than a full percent in March, it remains well above pre-recession levels,” said Basu. “As spring finally settles in, the construction unemployment rate should return to the levels experienced in the third and fourth quarters of 2013 (approximately 9 percent).”

According to the Bureau of Labor Statistics’ household survey, the national unemployment rate remained unchanged in March at 6.7 percent as the country added a total of 192,000 jobs. January and February’s jobs reports also were revised upward by a combined 37,000 jobs.

“Although the unemployment rate remained unchanged in March, the labor force (those either employed or seeking employment) increased by 1.5 million in the first quarter of 2014 after falling by 500,000 in 2013,” said Basu. “Gains to the labor force will, at least in the short term, apply upward pressure on the unemployment rate. That said, given the number of jobs created, upward revisions to prior months and expansion of the average workweek, today’s jobs report should not be viewed as disappointing.”

Nonresidential building construction employment grew by 2,200 jobs for the month and is up by 14,000 jobs (2.1 percent) since March 2013.

Residential building construction employment rose by 3,100 jobs in March and is up by 547,800 jobs (7.9 percent) since March 2013.

Nonresidential specialty trade contractors gained 4,500 jobs for the month and employment in that category is up by 12,700 jobs (0.6 percent) compared to the same time last year.

Residential specialty trade contractors gained 6,000 jobs in March and have added 55,200 jobs (3.6 percent) since March 2013.

The heavy and civil engineering construction segment gained 3,200 jobs in March and job totals are up by 22,100 (2.5 percent) compared to the same time last year.

To view the previous Employment report, click here

ABC Reports:Nonresidential Construction Spending Inches Higher

CEU2“The conventional wisdom is that this year’s winter weather has suppressed spending and that will make the spring recovery even stronger than it would have been, as pent up supply is released.” —ABC Chief Economist Anirban Basu.

spending_4 1The U.S. Census Bureau announced today that nonresidential construction spending increased 0.6 percent in February and has risen 6.1 percent since February 2013. The gains follow nonresidential construction spending declines in both January and December. Spending for the month totaled $580.5 billion on a seasonally adjusted, annualized basis.

“February’s construction spending data is difficult to interpret, as was the case in December and January, because of the lengthy and harsh winter,” said Associated Builders and Contractors Chief Economist Anirban Basu. “The conventional wisdom is that this year’s winter weather has suppressed spending and that will make the spring recovery even stronger than it would have been, as pent up supply is released. However, the level of recovery in construction spending has not been enough to significantly improve pricing power and profit margins.

“In addition, based on ABC’s analysis of the Bureau of Labor Statistics Job Opening and Labor Turnover Survey (JOLTS), skills shortages impacting construction are becoming more commonplace, which also will place downward pressure on margins,” Basu said.

Spending rose in eight of the 16 nonresidential construction subsectors in February:

Communication construction spending increased 7.2 percent in February and is up 52 percent from the same time last year.

Highway and street-related construction spending expanded 1.3 percent in February and is up 11.4 percent compared to the same time last year.

Amusement and recreation-related construction spending increased 1.7 percent in February and is up 3.1 percent from the same time last year.

Lodging construction spending rose 2.9 percent in February and is 37 percent higher than the same time last year.

Health care-related construction spending increased 0.4 percent but is down 4.3 percent from the same time last year.

Office-related construction spending expanded 0.2 percent in February and is 12.9 percent higher than the same time last year.

Conservation and development-related construction spending rose 5.3 percent in February and is up 3.1 percent from the same time last year.

Power construction spending increased 4.7 percent for the month and is 11.4 percent higher than the same time last year.

Spending in eight nonresidential construction subsectors decreased in February:

Religious spending fell 7.3 percent for the month and is down 22.6 percent from the same time last year.

Education-related construction spending fell 1.1 percent for the month and is 22.6 percent lower than the same time last year.

Commercial construction spending fell 0.3 percent in February but is up 12.4 percent compared to the same time last year.

Public safety-related construction spending fell 7 percent in February and has declined 10.5 percent since the same time last year.

Sewage and waste disposal-related construction spending declined 1.9 percent for the month and is 5 percent lower than the same time last year.

Construction spending in the transportation category fell 1.2 percent in February but has increased 5.1 percent since the same time last year.

Spending in the water supply category was down 10 percent on the month and is 18.1 percent lower compared to the same time last year.

Manufacturing-related construction spending decreased 0.1 percent in February but is up 16.7 from the same time last year.

To view the previous spending report, click here