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ABC Reports: Construction Job Growth Accelerates Amid Optimistic Post-Election Outlook in November

1291931467352794367The U.S. construction industry added 19,000 net new jobs in November and has now added jobs for three consecutive months, according to analysis of U.S. Bureau of Labor Statistics data released today by Associated Builders and Contractors (ABC).

Industry employment is up by 2.4 percent on a year-over-year basis, considerably faster than the overall economy’s 1.6 percent job growth rate. Construction industry employment growth would likely be much sharper if more suitably skilled or trainable workers were available to fill available job openings. The skilled labor shortage appears to be impacting nonresidential activity more than residential. The nonresidential sector added 1,100 net new jobs in November, while the residential sector added 19,600 positions. Heavy and civil engineering lost 2,100 jobs for the month.

“The demand for construction talent was strong before the election, and the outcome has improved the near-term outlook for private and public construction activity,” said ABC Chief Economist Anirban Basu. “The implication is that demand for construction workers is positioned to remain high, which will translate into gradual reduction in industry unemployment and significant wage pressures.

“Some of these wage pressures are already evident,” said Basu. “Construction firms in the nation’s hottest markets, including New York, Seattle and Miami, report that in certain occupational categories, compensation is rising at a 10 percent per annum pace or more. This appears to be particularly true for construction superintendents and managers.

“Next year is shaping up to be a good one for both residential and nonresidential construction segments,” said Basu. “Of the two branches of the industry, nonresidential likely offers the larger upside. An infrastructure-led stimulus package would largely be oriented around nonresidential activities. Moreover, in certain markets, there is evidence that the apartment market is approaching saturation. Expected increases in interest rates next year would also tend to hit certain residential activities (i.e., single-family construction) more forcefully.”

The construction unemployment rate remained unchanged at 5.7 percent in November. One might have expected that this rate would have declined given the generally elevated levels of demand for construction talent. However, there are certain parts of the country that are softer economically, including many commodity-rich communities that have been impacted by lower oil and natural gas prices. Moreover, it is difficult to assess the skill level of jobseekers.

The unemployment rate for all U.S. industries fell to 4.6 percent, the lowest rate since mid-2007 and 0.3 percentage points below October’s rate. The labor force lost 226,000 persons for the month, but is still more than 2 million people larger than at the same time one year ago.

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ABC Reports:Nonresidential Construction Spending Gains Momentum

1291931467352794367Nonresidential construction spending totaled $699.7 billion on a seasonally adjusted, annualized basis in October, a 0.3 percent decrease from September’s significantly upwardly revised total, but an increase of 2.6 percent year-over-year according to analysis of U.S. Census Bureau data released today by Associated Builders and Contractors (ABC).

September’s nonresidential spending estimate was revised from $690.5 billion to $701.7 billion, a 1.6 percent increase. August’s estimate received a similar revision, increasing from $696.6 billion to $703.6 billion. Nonresidential spending is now 2.6 percent higher than at the same time one year ago.

“While the construction spending data remain challenging to interpret, the general story is still positive overall,” said ABC Chief Economist Anirban Basu. “Nonresidential construction spending is up by nearly 3 percent on a year-over-year basis. Certain segments are red hot, including the office and lodging segments, both of which have experienced more than 20 percent spending growth over the past 12 months. Investors, both domestic and global, continue to search for deals during a period of low global interest rates. Commercial real estate has emerged as one of the favorite destinations for investor capital, helping to raise property values and prompt significant numbers of construction starts.

“While certain private segments flourish, publically financed categories continue to languish,” said Basu. “This is particularly true in the public safety, conservation and development and sewage and waste disposal categories, all of which have seen year-over-year spending declines of 6.5 percent or more. The outcome of the election has lifted expectations for spending in many publically financed categories. Both major presidential candidates had discussed investing in infrastructure during their campaign. However, there was a conventional wisdom suggesting that divided government would be the most likely outcome, which would likely have translated into more stalemates and less infrastructure spending. With one party now controlling the U.S. Senate, U.S. House of Representatives and the White House, a meaningful infrastructure package may be more likely. While that will not affect spending numbers in the immediate near term, the longer-term outlook for infrastructure spending has brightened considerably since our previous report.

“In addition to the promise of augmented infrastructure spending, there are indications of corporate and personal tax cuts to come, increased defense spending, deregulation of the financial system, and lighter regulation of energy producers,” said Basu. “All of these policy shifts are consistent with greater construction spending going forward, at least for the foreseeable future. In other words, the 2017-18 nonresidential spending outlook has improved over the last several weeks. It remains to be seen how much the president-elect can accomplish over the next few months, and what affect that will have on the nonresidential construction segment of the U.S. economy.”

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Associated Builders and Contractors Congratulates President-elect Trump

1291931472167356058Associated Builders and Contractors (ABC) today released the following statement on the election of Donald Trump as president of the United States.

“Associated Builders and Contractors congratulates President-elect Donald Trump and Vice President-elect Mike Pence and looks forward to working with this administration to craft policies rooted in free enterprise that will encourage open competition and result in greater business investment and more construction jobs,” said ABC President and CEO Michael Bellaman. “With his background in real estate and development, Trump is very familiar with the obstacles to economic growth ABC members face, including our broken regulatory system, the increasingly difficult challenge of finding affordable health care coverage for employees, a growing shortage of appropriately skilled labor and the highest effective tax rate of any industry. We are hopeful that Trump will select judicial nominees that respect the traditional principles of separation of powers, and we urge his administration to implement policies that guarantee a fair and level playing field for all contractors, regardless of labor affiliation, such as prohibiting the government from mandating discriminatory project labor agreements.”
Associated Builders and Contractors (ABC) is a national construction industry trade association established in 1950 that represents nearly 21,000 members.

ABC Reports: Construction Growth Modest in Jobs Report

1291931467352794367The U.S. construction industry added 11,000 net new jobs in October, according to an analysis of U.S. Bureau of Labor Statistics data released today by Associated Builders and Contractors (ABC). Industry employment increased 0.2 percent on a monthly basis and 3 percent on a yearly basis. Nonresidential construction employment added 3,300 net new jobs for the month and 56,200 net new jobs from October 2015.

The nonresidential building subsector lost 800 jobs for the month and has experienced employment declines in six of the past seven months, but this was offset by a gain of 4,100 jobs among nonresidential specialty trade contractors. The residential sector added 4,500 jobs for the month while the heavy and civil engineering sector added 3,400 net new positions.

“Today’s nonresidential employment data can be viewed as reasonably positive from a topline perspective,” said ABC Chief Economist Anirban Basu. “Employment increased among nonresidential specialty trade contractors and also in the heavy and civil engineering segment. The nonresidential construction unemployment rate rose, which is actually good news, indicating that more people are searching for work in the industry. However, nonresidential building construction lost jobs, and there are reports that backlog has begun to shrink among a rising fraction of commercial contractors in several large U.S. metropolitan areas. Other data indicate that commercial real estate lending standards are tightening due to a combination of regulatory pressures and growing concerns regarding overbuilding in certain segments and in certain markets.

“Today’s job release also reveals relatively little about the near-term future,” said Basu. “Nonresidential construction spending has not been expanding in recent months, perhaps indicating that job growth in the industry will not be sustained. There is some hope that the end of the election cycle will usher forth a spirit of renewed confidence among private developers and public policymakers, which could translate into renewed nonresidential construction spending growth at some point next year.”

The construction industry unemployment rate increased by 0.5 percentage points in October and now sits at 5.7 percent. This rate, which is only presented on a nonseasonally adjusted basis, has risen in October in eight of the previous 10 years. The nationwide unemployment rate for all industries inched back down to 4.9 percent, falling a tenth of a percentage point from September. The national labor force shrank by 195,000 persons in October after expanding in each of the previous four months. Even so, the labor force has added over 2.6 million persons in the past twelve months, a 1.7 percent increase.

October Construction Employment

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ABC Reports: Nonresidential Construction Spending Down in September, but August Data Upwardly Revised

1291931467352794367Nonresidential construction spending fell 0.9 percent from August to September 2016, according to analysis of U.S. Census Bureau data released today by Associated Builders and Contractors (ABC). Nonresidential spending totaled $690.5 billion on a seasonally adjusted, annualized basis for the month, 0.7 percent below September 2015’s figure.

The government revised the August nonresidential construction spending estimate from $686.6 billion to $696.6 billion; otherwise September spending would have risen on a month-over-month basis.  Eleven of 16 nonresidential construction subsectors experienced monthly declines.

“Since late 2015, the level of nonresidential construction spending in America has been effectively flat,” said ABC Chief Economist Anirban Basu. “Undoubtedly, soft U.S. economic growth has had an impact on nonresidential construction spending growth. For several quarters prior to the third quarter of 2016, U.S. economic growth hovered around 1 percent.

“However, public policy has also played a large part in shaping trends in nonresidential construction,” said Basu. “A number of primarily publicly financed construction segments have experienced declines in spending over the past year, including sewage and waste disposal (-18.8%), water supply (-13.7%), public safety (-13.0%) and transportation (-11.3%). Meanwhile, the level of construction spending in office, lodging and commercial segments is up on a year-over-year basis, though spending in the office and commercial categories was down on a month-over-month basis and lodging-related construction was roughly flat.

“It is conceivable that uncertainty regarding federal, state and local elections is negatively impacting state and local government infrastructure spending,” said Basu. “That uncertainty causes projects to be shelved.  However, it is also possible that governments are shifting resources away from capital spending and toward other priorities, including surging Medicaid expenditures, rising compensation costs and underfunded pensions.

“Private spending growth in a number of categories softened a bit in September, perhaps because commercial real estate lenders have become increasingly concerned about potential overbuilding in certain segments and geographies,” warned Basu. “The implication is that nonresidential construction spending growth may not accelerate anytime soon, though there is some hope that the period following the elections will usher forth a period of renewed spending growth.”

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