Tag Archive for 'Associated Builders and Contractors'

ABC Reports: Construction Input Prices Plod Higher, Energy Prices Down

Construction input prices increased0.3 percent in July and are up 3 percent on a year-over-year basis, according to an Associated Builders and Contractors (ABC) analysis of data released today by the Bureau of Labor Statistics. Nonresidential construction input prices were in line with overall industry dynamics, increasing 0.3 percent for the month and 2.7 percent for the year.

Eight of 11 key construction input prices rose in July. Among the inputs experiencing declines in prices were crude petroleum (down 8 percent) and natural gas (down 7 percent). Natural gas prices have fallen during four of the past six months.

“Perhaps the most astonishing aspect of U.S. economic performance in recent years has been the general lack of inflation,” said ABC Chief Economist Anirban Basu. “Despite recently completing eight years of economic recovery and hurtling towards full employment, the Federal Reserve’s most intensely scrutinized measure of inflation remains well below 2 percent. Even worker compensation has not risen rapidly, despite indications by construction firms, trucking enterprises, hotel operators and manufacturers of large-scale shortfalls in human capital. America is presently home to 6.2 million job openings and 7 million unemployed, which means that there is nearly one job for every person looking for one.

“The lack of inflation helps explain many things, including low interest rates, rising levels of consumer indebtedness, rising home prices, high multiples on corporate earnings and elevated commercial real estate values. In other words,” said Basu, “the reasonably strong performance of the U.S. economy and the phenomenal performance of financial markets is largely traceable to surprisingly low inflation.

“It is in this context that today’s report is so important,” said Basu. “Inflationary pressures are certainly apparent in today’s report. True, one should not make too much out of a single month of data. Moreover, one cannot make the claim that today’s release is consistent with anything approaching rampant inflation.

“However, in certain input categories, the rise in prices has been noteworthy,” said Basu. “For instance, steel mill products, iron and steel and softwood lumber have each experienced price increases of around 10 percent over the past 12 months. With energy prices stabilizing recently, the construction producer price index is likely to exhibit faster growth during the months ahead. Many contractors continue to report elevated backlog, and other leading nonresidential construction indicators remain positive. This implies growing demand for materials in America. With the global economy firming and with the dollar having weakened a bit recently, the implication is that materials prices will continue to rise during the months ahead along with compensation costs. These dynamics are likely to place additional pressure on construction industry profit margins.

Visit ABC Construction Economics for the Construction Backlog Indicator, Construction Confidence Index and state unemployment reports, plus analysis of spending, employment, GDP and the Producer Price Index.

Associated Builders and Contractors (ABC) is a national construction industry trade association established in 1950 that represents more than 21,000 members.

Founded on the merit shop philosophy, ABC and its 70 chapters help members develop people, win work and deliver that work safely, ethically and profitably for the betterment of the communities in which ABC and its members work. Visit us at abc.org.

ABC Reports: Nonresidential Construction Spending Plummets in June, Driven by Public Sector

Nonresidential construction spending fell by 2 percent on a monthly basis in June 2017, totaling $697 billion on a seasonally adjusted, annualized basis according to an analysis of U.S. Census Bureau data released today by Associated Builders and Contractors. June represents the first month during which spending has dipped below the $700 billion per year threshold since January 2016.

June’s weak construction spending report can be largely attributed to the public sector. Public nonresidential construction spending fell 5.4 percent for the month and 9.5 percent for the year, and all twelve public subsectors decreased for the month. Private nonresidential spending remained largely unchanged, increasing by 0.1 percent for the month and 1.1 percent for the year. April and May nonresidential spending figures were revised downward by 1.1 percent 0.4 percent, respectively.

“Coming into the year, there were high hopes for infrastructure spending in America,” said ABC Chief Economist Anirban Basu. “The notion was that after many years of a lack of attention to public works, newfound energy coming from Washington, D.C., would spur confidence in federal funding among state and local transportation directors as well among others who purchase construction services. Instead, public construction spending is on the decline in America. Categories including public safety and flood control have experienced dwindling support for investment, translating into a nine percent decline in public construction spending over the past twelve months.

“On the other hand, several private segments continue to manifest strength in terms of demand for construction services,” said Basu. “At the head of the class are office construction, driven by a combination of job growth among certain office-space-using categories as well as lofty valuations, and communications, which is being driven largely by enormous demand for data center capacity.

“While there are certainly some parts of the nation experiencing significant levels of public construction, those areas have increasingly become the exception as opposed to the rule,” said Basu. “The more general and pervasive strength is in private segments. Based on recent readings of the architecture billings index and other key leading indicators, commercial contractors are likely to remain busy for the foreseeable future. The outlook for construction firms engaged in public work remains unclear.

ABC Reports: National Construction Unemployment Rate Falls to 4.5 Percent, the Lowest June Rate on Record

In June, the not seasonally adjusted (NSA) construction unemployment rate was 4.5 percent, down 0.1 percent from a year ago and the lowest June rate on record, according to data from the U.S. Bureau of Labor Statistics (BLS). According to an analysis released today by Associated Builders and Contractors (ABC), NSA construction unemployment rates were down in 31 states on a year-over-year basis, and the construction industry employed 204,000 more workers than in June 2016.

Because these industry-specific rates are not seasonally adjusted, national and state-level unemployment rates are best evaluated on a year-over-year basis.

“Not only was this the lowest national not seasonally adjusted June construction unemployment rate on record, but all the states had estimated construction unemployment rates below 10 percent,” said Bernard M. Markstein, Ph.D., president and chief economist of Markstein Advisors, who conducted the analysis for ABC. “That is an indication of the health of the construction industry, although a shortage of skilled construction workers still appears to plague the industry.”

Since the beginning of the data series in January 2000, the monthly movement in the national NSA construction unemployment rate from May to June has been a decrease every year except one—2010, when there was no change in the rate from May. This trend continued in 2017 with a 0.8 percent rate drop in the NSA rate from the month before. Among the states, 38 had declines in their June estimated rate from May, and two (Iowa and South Carolina) saw no change.

The Top Five States

The states with the lowest estimated NSA construction unemployment rates in order from lowest rate to highest were:

  1. Idaho, 1.4 percent
  2. Vermont, 2 percent
  3. Colorado and New Hampshire (tied), 2.2 percent
  4. North Dakota, 2.3 percent

Three states—Colorado, Idaho and Vermont—were also among the top five in May.

Idaho, with a 1.4 percent estimated NSA construction unemployment rate, had the lowest rate among the states. It was also the state’s lowest June NSA rate since the 1.1 percent in June 2007.

Vermont, with a 2 percent construction unemployment rate, had the second lowest rate in June. This was down from the lowest rate in May. It was the state’s second lowest estimated June rate after the 1.8 percent rate in June 2004.

Colorado and New Hampshire tied for third lowest June rate, with a 2.2 percent construction unemployment rate. It was the state’s second lowest June rate (matching June 2001’s 2.2 percent rate) since the 1.5 percent rate in June 2000.

New Hampshire catapulted to third from 17th lowest rate in May. Its rate is the state’s lowest June construction unemployment rate since the estimates began in 2000. Also, the Granite State had the fifth largest monthly decline, down 1.9 percent.

North Dakota, with a 2.3 percent rate, had the fifth lowest rate in June. Indiana and Iowa dropped out of the top five in June, with unemployment rates of 2.8 percent and 2.4 percent, respectively.

The Bottom Five States

The states with the highest NSA construction unemployment rates in order from lowest to highest rates were:

  1. Alabama and Connecticut (tied), 6.8 percent
  2. Mississippi, 7.2 percent
  3. Alaska, 7.3 percent
  4. New Mexico, 9.1 percent

Three of these states—Alaska, New Mexico and Mississippi—were also among the five states with the highest construction unemployment rates in May. New Mexico had the highest estimated NSA construction unemployment rate in June, 9.1 percent.

Alaska had the second highest rate in June at 7.3 percent, marking the end of nine straight months with the highest rate in the nation. The state posted the largest monthly rate drop from May in the country (down 3.9 percent).

Mississippi had the third highest estimated NSA construction unemployment rate in June, 7.2 percent. On the positive side, it was the state’s second lowest June construction unemployment rate since the beginning of the estimates in 2000, behind last year’s 6.5 percent rate.

Alabama and Connecticut had the fourth highest rate in June, 6.8 percent. Alabama had the largest monthly increase in the nation, up 1.1 percent. Nevertheless, it was Alabama’s lowest June rate since the 5.6 percent rate in June 2007. Although Connecticut’s rate was up from last June’s 5.9 percent rate (the fifth largest year-over-year increase—up 0.9 percent), June’s 6.8 percent was the state’s second lowest June construction unemployment rate since the 6.6 percent rate in 2007.

Missouri, which tied with Mississippi for the fourth highest rate in May, improved to the 19th highest rate in June. The state’s 3.4 percent rate drop from May was the second largest in the country.

To better understand the basis for calculating unemployment rates and what they measure, see the article Background on State Construction Unemployment Rates.

Visit ABC Construction Economics for the Construction Backlog Indicator, Construction Confidence Index and state unemployment reports, plus analysis of spending, employment, GDP and the Producer Price Index.

ABC Says, U.S. Economic Growth Accelerates in Second Quarter; Nonresidential Fixed Investment Maintains Momentum

Real gross domestic product (GDP) expanded by 2.6 percent on a seasonally adjusted annualized basis during the year’s second quarter, according to Associated Builders and Contractors’ analysis of data released today by the Bureau of Economic Analysis. Nonresidential fixed investment, a category of GDP embodying nonresidential construction activity, expanded at a 5.2 percent seasonally adjusted annual rate. This follows a 7.2 percent expansion during the first quarter.

The expansion in nonresidential fixed investment indicates that growth in business outlays continues to support the ongoing economic recovery, now in its ninth year.  The expansion of nonresidential fixed investment contributed more than sixth-tenths of a percentage point to GDP growth.  This was due in large measure to an uptick in investment in construction equipment.  The other two components of nonresidential fixed investment—investment in structures and intellectual property—also expanded, but at a slower pace.

“This was a good report from the perspective of the nation’s nonresidential construction firms, particularly those primarily engaged in private as opposed to public construction,” said ABC Chief Economist Anirban Basu.  “The uptick in investment in construction equipment is particularly noteworthy because it signals a general belief that construction activity will continue to recover in America.  Backlog among many nonresidential construction firms is already healthy, and today’s report suggests that backlog is not set to decline in any meaningful way anytime soon.

“One might wonder why construction firms remain so busy in an economic environment still characterized by roughly 2 percent growth,” said Basu.  “There are many factors at work, including the ongoing boom of the e-commerce economy, which has continued to trigger demand for massive fulfillment and distribution centers even as stores close in massive numbers at America’s malls.  The influx of global investment to a number of segments, including hotel and office construction, also helps explain disproportionate growth in certain private categories.  With global fixed-income yields remaining so low, investors from around the world, including from the United States, are likely to continue to seek out opportunities for higher rates of return in commercial real estate, which thus far has had the impact of increasing property values and triggering construction.

“For the broader economy to accelerate, policymakers in Washington, D.C., will need to begin to make progress on corporate tax relief and infrastructure,” said Basu.

Source: Bureau of Economic Analysis

Visit ABC Construction Economics for the Construction Backlog Indicator, Construction Confidence Index and state unemployment reports, plus analysis of spending, employment, GDP and the Producer Price Index.

 

 

ABC Calls on Congress to Support Expansion of Construction Apprenticeship Programs

Michael Bennett, vice president of the Cianbro Cos., Pittsfield, Maine, today told Congress that industry-driven training programs should play a bigger role in government efforts to close the workforce/skills gap that has left 500,000 construction jobs unfilled in the United States today. Bennett testified on behalf of Associated Builders and Contractors (ABC) before the U.S. House Committee on Education and Subcommittee on Higher Education and Workforce Development to call for support for President Trump’s recent executive order expanding apprenticeships, which would help ensure job seekers get exactly the training required for success in today’s job market.

“At Associated Builders and Contractors, as with Cianbro, we support all workforce programs that develop people and help them reach their potential, whether they’re government-defined, like apprenticeships, or industry-driven,” said Bennett.  “As we look at the holistic picture of workforce development, successful models combine technical knowledge and proficiency through hands-on application and on-the-job experience. When you employ the earn-while-you-learn model and support individuals with lifelong learning and mentoring, the opportunities are endless.”

Bennett called for flexibility in designing apprenticeship and other types of training programs in an “all-of-the-above” approach to workforce development that aligns with the needs of the educational system and businesses, including:

  • Creating multiple pathways to excellence for apprentices;
  • Establishing reciprocity across federal and state apprenticeship councils;
  • Allowing nationally recognized, portable, industry-recognized credentialing programs with third-party oversight, including targeted programs for high-demand skills; and
  • Ensuring that such programs are industry- and market-driven, competency-based and flexible in structure, scheduling and duration to address industry needs.

“Industry-recognized programs come in all shapes and sizes, and that is the beauty of them: they provide for the highest level of flexibility that benefits the worker, their company and their client,” Bennett said. “Industry-recognized programs give students, veterans, second-chance seekers and the entire American public an opportunity to learn a skill, develop themselves and build their careers. They  are the best tools available right now.”

For more information on careers in construction, visit workforce.abc.org.