Tag Archive for 'Associated Builders and Contractors'

ABC Reports: Nonresidential Fixed Investment Expands 5.5 Percent During Robust Second Quarter

CEU2“The robust second quarter growth was primarily driven by higher consumer and business spending, ” —ABC Chief Economist Anirban Basu.

GDP_Q2_2014Nonresidential fixed investment expanded 5.5 percent and residential fixed investment expanded 7.5 percent during the second quarter of 2014 according to a July 30 release by the Bureau of Economic Analysis. Overall, real gross domestic product (GDP) increased 4 percent (seasonally adjusted annual rate) during the second quarter of 2014 following a 2.1 percent decrease (revised from -2.9 percent) in the first quarter.

“The robust second quarter growth was primarily driven by higher consumer and business spending,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Today’s 4 percent reading on second quarter GDP blew away consensus expectations of 3 percent, and the first quarter wasn’t quite as bad as suspected either. Viewed collectively, the data indicate that the U.S. recovery should exhibit decent momentum through the balance of the current year and into 2015.

“Nonresidential fixed investment expanded even more briskly than the broader economy,” said Basu. “However, the rebound from the dismal first quarter was broad-based; federal government spending was the only segment that contracted during the second quarter.”

Estimates for 2013 were revised to 2.2 percent growth, up from 1.9 percent in previous estimates. However, the revisions also show that the economy grew at a slower pace from 2009 to 2012 than previously thought. “This recovery was already the weakest in U.S. history,” said Basu. “Since the recession ended in the second quarter of 2009, the economy has grown at an average annual rate of just 2.3 percent (revised down from 2.4 percent in previous estimates).

“Despite the slow and laborious recovery, there is reason for optimism,” said Basu. “Today’s announcement marks the nonresidential fixed income segment’s strongest quarter since the beginning of 2012. In light of this positive data, expect nonresidential employment growth and construction spending—both of which will be released on Friday—to continue to trend higher.”

The following segments expanded during the second quarter and/or contributed to GDP.

Personal consumption expenditures added 2.5 percent to GDP after contributing 1.2 percent in the first quarter.

Spending on goods grew 6.2 percent.

Real final sales of domestically produced output—minus changes in private inventories—increased 4.3 percent after a 0.4 percent increase in the first quarter.

National defense spending expanded 1.1 percent after falling 4.0 percent in the first quarter.

State and local government spending expanded 3.1 percent during the second quarter after falling 1.3 percent in the first quarter.

Two key segments did not experience quarterly growth.

Federal government spending fell 0.8 percent in the second quarter following a 0.1 percent decrease in the prior quarter.

Nondefense spending fell 3.7 percent after gaining 6.6 percent in the previous quarter.

To view the previous GDP report, click here.

ABC Reports: Construction Materials Prices Inch Higher in June

CEU2“Prices for inputs to construction industries have now risen in five of the year’s first six months.” —ABC Chief Economist Anirban Basu.

PPI July 2014Overall construction materials prices increased by 0.1 percent in June and are up 1.9 percent year over year, according to the July 16 producer price index release by the U.S. Department of Labor. Nonresidential construction materials prices also expanded 0.1 percent for the month and are 1.4 percent higher than one year ago.

“Prices for inputs to construction industries have now risen in five of the year’s first six months,” said Associated Builders and Contractors Chief Economist Anirban Basu. “This marks a significant departure from the previous year’s remarkable stability. Recent monthly gains have been modest—0.1 percent in June and unchanged in May; however, the surprisingly upbeat economic news from China (Chinese GDP grew 7.5 percent in the second quarter), along with a slew of large construction starts in specific regions of the U.S., suggest that prices may continue to rise—albeit modestly— through the second half of 2014.

“A number of international conflicts could apply upward pressure on material prices,” said Basu. “The Middle East is as turbulent as ever and as construction volume increases, any supply-related disruptions could lead to a period of meaningful price inflation.

“The effects of the metal financing scandal at Qingdao port in China—the world’s seventh busiest port— are also yet to be seen,” said Basu. “In May, Chinese authorities launched an investigation into Decheng Mining, a private metals trading firm that used fraudulent warehouse receipts to obtain several loans against a single cargo of metal. As more firms take legal actual against Decheng, we simply do not know the extent to which the financing fraud will impact the metals market.”

Crude energy materials prices expanded 1.2 percent in June and are 6 percent higher than one year ago. Natural gas prices fell by 1.5 percent in June and have now fallen in three of the past four months. Overall, the nation’s wholesale goods prices expanded by 0.4 percent in June and are up 1.9 percent year over year.

The following materials prices increased in June.

Crude petroleum prices increased 3.2 percent in June and are up 5.6 percent from June 2013.

Crude energy materials prices expanded by 1.2 percent in June and are 6.0 percent higher year-over-year.

Softwood lumber prices expanded 2.3 percent and are 7.3 percent higher than one year ago.

Prices for plumbing fixtures expanded 0.4 percent in June and are up 2.4 percent on a year-over-year basis.

Concrete products prices expanded 0.4 percent in June and are up 3.5 percent on a yearly basis.

Steel mill products prices rose 0.5 percent for the month and are 4.1 percent higher than one year ago.

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

Prices for prepared asphalt, tar roofing, and siding declined 1 percent for the month and are down 6.6 percent on a year-over-year basis.

Fabricated structural metal product prices remained flat for the month but have increased 1.3 percent on a year-over-year basis.

Iron and steel prices declined 0.2 percent in June but are up 4.6 percent from the same time last year.

Nonferrous wire and cable prices remained flat on a monthly basis but are down 1.6 percent from June 2013.

Natural gas prices shed 1.5 percent in June but are 12.9 percent higher than one year ago.

To view the previous PPI report, click HERE

ABC Reports: Construction Adds Jobs in June but Nonresidential is Sluggish

CEU2“Given that the economy added over 200,000 jobs for the fifth consecutive month in June, there is some optimism about improvement in the second quarter; however, the lack of monthly construction employment growth, particularly in the nonresidential sector, is troubling.”—ABC Chief Economist Anirban Basu.

Employment_7.3The U.S. construction industry added 6,000 jobs in June, according to the Bureau of Labor Statistics (BLS) July 3 report; however, nonresidential construction added only 700 of those jobs and the heavy and civil engineering sector lost 700 jobs.

“Although nonresidential construction’s performance is somewhat disappointing, the general tenor of today’s employment report is upbeat. It is worth noting that nonresidential construction tends to lag that of the overall economy,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Today’s jobs number are largely of a reflection of the softer growth recorded by the U.S. economy for much of last year and during the initial months of 2014.

“Given that the economy added over 200,000 jobs for the fifth consecutive month in June, there is some optimism about improvement in the second quarter; however, the lack of monthly construction employment growth, particularly in the nonresidential sector, is troubling.” said Basu.

“Although the national construction unemployment rate stands at 8.2 percent on a non-seasonally adjusted basis, there are parts of the nation in which unemployment is far lower,” Basu said. “In fact, there are emerging shortages of industrial construction workers in growing segments of the south, which will trigger large increases in wages and per diems during the year ahead. By contrast, there are communities in which construction unemployment remains well above the 8.2 percent average, suggesting that wage inflation will only be meaningfully experienced in certain communities.”

According to the BLS household survey, the national unemployment rate fell to 6.1 percent in June, reaching its lowest level since September 2008. The civilian labor force expanded by 81,000 in June.

Individual sectors saw the following changes:

Nonresidential building construction employment increased by 2,100 jobs for the month but is up by 22,200 jobs, or 3.3 percent, since June 2013.

Residential building construction employment rose by 4,500 jobs in June and is up by 50,600 jobs, or 8.3 percent, on an annual basis.

Nonresidential specialty trade contractors lost 1,400 jobs for the month but employment in that category is up by 29,500 jobs, or 1.4 percent, from the same time last year.

Residential specialty trade contractors gained 2100 jobs in June and have added 55,700 jobs, or 3.6 percent, since June 2013.

The heavy and civil engineering construction segment lost 700 jobs in June but job totals are up by 28,300, or 3.2 percent, on a year-over-year basis.

To view the previous Spending report, click here

ABC Reports: Nonresidential Construction Spending Continues to Expand in May

CEU2“Today’s release helps confirm ABC’s notion that the winter decline in nonresidential construction spending was largely due to unusually harsh weather as opposed to shifting economic fundamentals.”—ABC Chief Economist Anirban Basu.

Spending_7 1Nonresidential construction spending expanded in May for the second consecutive month (based on revised data), according to a July 1 release from the U.S. Census Bureau. Nonresidential construction spending rose 1.1 percent on a monthly basis in May and has increased 6.4 percent on a year-over-year basis. Spending for the month totaled $596.2 billion on a seasonally adjusted, annualized basis. Additionally, nonresidential construction spending for April was revised upward from $570.6 billion to $589.9 billion.

“Nonresidential construction spending is now at its highest level since October 2009, though that does not account for the cost of inflation,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Today’s release helps confirm ABC’s notion that the winter decline in nonresidential construction spending was largely due to unusually harsh weather as opposed to shifting economic fundamentals.”

“ABC’s economic forecast continues to call for ongoing healing in the industry,” said Basu. “Given recent hiccups in U.S. macroeconomic performance, as measured by gross domestic product, and public funding constraints, gradual recovery is perhaps the best the overall industry can anticipate.”

Eleven of 16 nonresidential construction subsectors posted increases in spending in May.

Office-related construction spending grew 0.6 percent in May and is up 18.9 percent from the same time one year ago.

Construction spending in the transportation category expanded 2.2 percent on a monthly basis and has risen 7.5 percent on a year-over-year basis.

Religious spending grew 1.4 percent for the month, but is down 3.9 percent from the same time last year.

Sewage and waste disposal-related construction spending gained 4 percent for the month, but has fallen 1.3 percent on an annual basis.

Amusement and recreation-related construction spending expanded 3.1 percent on a monthly basis and is up 8.5 percent from the same time last year.

Conservation and development-related construction spending increased 1.2 percent for the month and is up 16 percent on a yearly basis.

Highway and street-related construction spending expanded 0.7 percent in May and is up 2.3 percent compared to the same time last year.

Communication construction spending grew 2.3 percent for the month, but is down 1.1 percent from the same time one year ago.

Public safety-related construction spending expanded 0.3 percent on a monthly basis, but has declined 10.9 percent on a year-over-year basis.

Power construction spending grew 3.9 percent for the month and was 25.9 percent higher than the same time last year.

Spending in the water supply category expanded 8.5 percent for the month and is unchanged year over year.

Spending in five nonresidential construction subsectors declined in May.

Manufacturing-related spending fell 1.4 percent on a monthly basis, but is up 6.3 percent compared to the same time last year.

Health care-related construction spending fell 1.6 percent for the month and is down 10.1 percent from May 2013.

Education-related construction spending fell 0.5 percent for the month and is down 0.8 percent on a year-over-year basis.

Commercial construction spending fell 1.1 percent in May, but is up 4.6 percent on a year-over-year basis.

Lodging construction spending is down 1.2 percent on a monthly basis, but is up 11.4 percent on an annual basis.

To view the previous Spending report, click here.

ABC Celebrates Supreme Court’s Recess Appointment Ruling

image007Associated Builders and Contractors (ABC) today celebrated the Supreme Court’s decision in National Labor Relations Board v. Noel Canning that President Obama unconstitutionally bypassed the U. S. Senate by appointing Sharon Block, Richard Griffin and Terrence Flynn to fill National Labor Relations Board (NLRB) vacancies.

“By upholding the U.S. Court of Appeals’ decision, the Supreme Court has reaffirmed the Senate’s role in the executive appointment process,” said ABC Vice President of Government Affairs Geoff Burr. “Today’s ruling overturning President Obama’s illegal recess appointments to the NLRB is a victory for ABC, the Constitution and our system of checks and balances, and it serves as a clear rejection of the president’s unprecedented expansion of executive authority.

The original case was brought by Noel Canning, a Washington state bottling company, which challenged an NLRB decision that it must enter into a collective bargaining agreement with a labor union. The ABC-led Coalition for a Democratic Workplace intervened in the case and, last January, the U.S. Court of Appeals for the D.C. Circuit ruled that the president violated the Constitution when he bypassed the Senate to fill NLRB vacancies.

In addition to reaffirming the legislative branch’s role in the presidential appointee confirmation process, today’s Supreme Court ruling jeopardizes the legal status of more than 1,000 Board actions over the past two years.