Tag Archive for 'Associated Builders and Contractors'

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

ABC Reports: Nonresidential Construction Spending Rebounds in July

CEU2 “Today’s encouraging report provides further evidence that a vigorous nonresidential construction recovery is finally at hand.”—ABC Chief Economist Anirban Basu.

Construction Spending_9 2Nonresidential construction spending expanded strongly in July, growing 2.5 percent on a monthly basis and rising a robust 8.6 percent on a year-over-year basis according to a Sept. 2 release from the U.S. Census Bureau. Spending for the month totaled $617.8 billion on a seasonally adjusted, annualized basis. The government also revised upward a somewhat disappointing June nonresidential construction spending estimate from $589 billion to $603 billion and the estimate for May from $606 billion to $611 billion.

“Today’s encouraging report provides further evidence that a vigorous nonresidential construction recovery is finally at hand,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Increased job growth, booming energy production, expanding industrial production and normalizing capital markets are all contributing to nonresidential construction’s renewed momentum and confidence among developers and other significant consumers of construction services is high, signaling ongoing recovery.

“The economy is recovering rapidly enough to improve real estate conditions in meaningful ways without triggering a shift in the Federal Reserve’s still accommodative policy making,” said Basu. “Both stock and bond markets have been rallying of late, which has helped to generate wealth and lower borrowing costs simultaneously, an ideal situation for construction. Progress has been particularly apparent in power and industrial segments, with year-over-year construction spending up 26 percent in the power category and 24 percent in manufacturing.”

Spending increased on a monthly basis in 11 of 16 nonresidential construction subsectors in July.

  • Office-related construction spending grew by 0.1 percent in July and is up 20 percent from the same time one year ago.
  • Health care-related construction spending grew 1.6 percent for the month, but is down 6.0 percent from the same time last year.
  • Manufacturing related spending grew 4.7 percent on a monthly basis and is up 23.9 percent on an annual basis.
  • Education-related construction spending grew 0.5 percent for the month but is down 1.2 percent on a year-over-year basis.
  • Lodging construction spending is up 2.7 percent on a monthly basis and is up 16.0 percent on a year-over-year basis.
  • Spending in the water supply category expanded 2 percent from June, but is 2.8 percent lower than at the same time last year.
  • Construction spending in the transportation category grew 0.4 percent on a monthly basis and has expanded by 2.2 percent on an annual basis.
  • Amusement and recreation-related construction spending grew 0.2 percent on a monthly basis and is up 12 percent from the same time last year.
  • Highway and street-related construction spending expanded 6.9 percent in July and is up 2.7 percent compared to the same time last year.
  • Public safety-related construction spending gained 3.3 percent on a monthly basis and is up 9.6 percent on a year-over-year basis.
  • Power construction spending gained 7.2 percent for the month and is 25.7 percent higher than at the same time one year ago.

Spending in five nonresidential construction subsectors declined in July.

  • Commercial construction spending fell 2.8 percent in July, but is up 6.9 percent on a year-over-year basis.
  • Communication construction spending fell 1.2 percent for the month and is down 11.3 percent on an annual basis.
  • Religious spending fell 5.1 percent for the month and is down 1.3 percent from the same time last year.
  • Sewage and waste disposal-related construction spending fell 1.4 percent for the month, but has grown 3.1 percent on a 12-month basis.
  • Conservation and development-related construction spending fell 7.1 percent for the month, but is up 24.8 percent on a yearly basis.

To view the previous spending report, click here.

ABC Reports: Construction Materials Prices Flat in July

CEU2“The weakening of economies in Europe, Japan and elsewhere has reduced demand for construction materials on a global basis.” —ABC Chief Economist Anirban Basu.

ppi_8 15 14Overall, construction materials prices inched higher in July and are up 2 percent year over year, according to the Aug. 15 producer price index (PPI) release by the U.S. Department of Labor. Nonresidential construction materials prices were flat for the month and are just 1.4 percent higher than at the same time one year ago.

“The weakening of economies in Europe, Japan and elsewhere has reduced demand for construction materials on a global basis, helping to offset the impact of geopolitical strife in commodity-rich areas,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Oil and other commodity prices have actually been falling in recent days as additional bad economic news emerges from Germany, France, Italy and other major economies.”

Crude energy materials prices fell 6.3 percent in July and are 1.7 percent lower than one year ago. Natural gas prices fell by 5.7 percent in July and have now fallen in four of the past five months on a monthly basis. On a year-over-year basis, natural gas prices have expanded by more than 10 percent for each month of 2014. Overall, the nation’s final demand prices, as measured by the PPI, expanded by 0.1 percent in July and are up 1.7 percent year over year.

“While the harsh winter helped to lift energy prices during the initial quarter of 2014, a cool and pleasant summer has helped to usher them in the opposite direction,” said Basu. “From a monetary policy perspective, the 1.7 percent year-over-year gain in overall final demand prices bodes well for those who would prefer to see the Federal Reserve continue its soft-on-inflation policymaking. During previous months, final demand price gains were in the range of 2 percent on a year-over-year basis. The July data will help to assuage inflation-related fears.”

The following materials prices increased in July.

· Softwood lumber prices expanded 3.4 percent and are 9.5 percent higher than one year ago.

· Prices for plumbing fixtures expanded 0.9 percent in July and are up 2.8 percent on a year-over-year basis.

· Concrete products prices expanded 0.4 percent in July and are up 3.6 percent on a yearly basis.

· Steel mill products prices rose 0.1 percent for the month and are 3.9 percent higher than one year ago.

· Fabricated structural metal product prices grew 0.2 for the month and have expanded 1.3 percent on a year-over-year basis.

· Nonferrous wire and cable prices grew 0.6 percent on a monthly basis, but are down 0.8 percent from July 2013.

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

· Prices for prepared asphalt, tar roofing, and siding declined 4.2 percent for the month and are down 9.1 percent on a year-ago basis.

· Iron and steel prices remained flat in July and are up 3.2 percent from the same time last year.

· Natural gas prices shed 5.7 percent in June but are 16.4 percent higher than one year ago.

· Crude petroleum prices fell 8 percent in July on both a monthly and a yearly basis.

· Crude energy materials prices fell 6.3 percent in July and are 1.7 percent lower year over year.

To view the previous PPI report, click HERE