Tag Archive for 'Associated Builders and Contractors'

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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

ABC Reports:Construction Employment Regains Momentum While Construction Spending Falters

CEU2“Gains in momentum for the U.S. economy mean that nonresidential construction is poised for better times ahead.”—ABC Chief Economist Anirban Basu.

According to the Bureau of Labor Statistics Aug. 1 preliminary employment report, the U.S. construction industry added 22,000 jobs in July with nonresidential construction contributing 6,600 of those jobs—including 2,500 jobs in the heavy and civil engineering segment— which represents a significant improvement from the 100 nonresidential construction jobs added the previous month.

In the U.S. Census Bureau report analyzing construction spending for June, nonresidential construction spending fell for the month after posting significant gains the two prior months, but remains 4.6 percent higher from a year ago. Spending for June totaled $588.8 billion on a seasonally adjusted, annualized basis, a 2.8 percent drop from the upwardly revised $605.6 billion in nonresidential construction spending from the previous report.

Nonresidential Construction Employment Regains Momentum in July

“Economic news continues to improve as the U.S. economy has now added more than 200,000 jobs a month for six consecutive months, the first winning streak of this type since 1997,” said Associated Builders and Contractors Chief Economist Anirban Basu. “While nonresidential construction’s cycle tends to lag that of the overall economy by roughly a year, gains in momentum for the U.S. economy mean that nonresidential construction is poised for better times ahead. While the 6,600 nonresidential jobs added last month may hardly seem Earth-shattering, it’s important to note that the U.S. economy only expanded by around 1 percent during the first six months of the year. The renewal of economic momentum remains in its infancy, but this momentum will gradually translate into an acceleration of nonresidential employment creation.”

The national construction unemployment rate fell to 7.5 percent on a non-seasonally adjusted basis in July. “July’s construction unemployment rate represents the lowest figure since November 2007, the month before the recession began,” said Basu. “The rate of unemployment is even lower in certain rapidly expanding states, including North Dakota, Texas and Louisiana, which are wrestling with too few construction workers, not too many.”

According to the Bureau of Labor Statistics’ household survey, the national unemployment rate inched up a tenth of a point in July to 6.2 percent. That should not be viewed as bad news, however, as the labor market expanded by 329,000 people and labor force participation crept up to 62.9 percent.

“Historically, July is not a good month for labor force growth,” said Basu. “But the most recent July is associated with the most solid labor force expansion observed since 1996.”

“Before nonresidential construction stakeholders become too excited, it should be noted that the recovery of the U.S. labor market is not unfettered good news,” Basu concluded. “Growing evidence of emerging wage pressures is likely to translate into higher interest rates, if not now, then at some point. That would likely temper at least some of the industry momentum presently building.”

Individual sectors saw the following changes:

Nonresidential building construction employment fell by 400 jobs for the month, but is up by 21,100 jobs, or 3.1 percent, since July 2013.

Residential building construction employment rose by 6,100 jobs in July and is up by 54,400 jobs, or 8.9 percent, on an annual basis.

Nonresidential specialty trade contractors added 7,000 jobs for the month and employment in that category is up by 40,800 jobs, or 1.9 percent, from the same time one year ago.

Residential specialty trade contractors gained 6,900 jobs in July and have added 61,200 jobs, or 3.9 percent, since July 2013.

The heavy and civil engineering construction segment gained 2,500 jobs in July and job totals are up by 33,800, or 3.8 percent, on a year-over-year basis.

Employment_8 1To view the previous employment report, click here.

Nonresidential Construction Spending Growth Falters in June

“The monthly decline in spending should not be cause for significant alarm,” said Associated Builders and Contractors Chief Economist Anirban Basu. “The impact of a brutal winter continues to manifest itself in the data. A considerable volume of construction was postponed during the year’s initial months with some of that construction taking place in April and May, artificially boosting activity during those months. Accordingly, June doesn’t look particularly good from a month-over-month perspective, but from a year-over-year perspective, the growth in spending looks perfectly adequate. Stakeholders should not have anticipated an upbeat June number in any case after national nonresidential construction employment expanded by just 100 people that month.”

“With job growth accelerating, consumer outlays expanding, industrial production rising and energy production surging, the outlook for nonresidential construction remains good,” said Basu. “The next few months should be associated with improving performance, if not on a monthly basis, then on a year-over-year one.”

Five of 16 nonresidential construction subsectors posted increases in spending in June on a monthly basis.

Office-related construction spending grew by 0.4 percent in June and is up 20.7 percent from the same time one year ago.

Religious spending grew 0.7 percent for the month and is up 4.3 percent from the same time last year.

Sewage and waste disposal-related construction spending gained 0.3 percent for the month and has grown 7.8 percent on a 12-month basis.

Conservation and development-related construction spending expanded by 13.5 percent for the month and is up 47.6 percent on a yearly basis.

Health care-related construction spending grew 2.5 percent for the month, but is down 5.6 percent on an annual basis.

Spending in 11 nonresidential construction subsectors declined in June.

Manufacturing-related spending fell 0.4 percent on a monthly basis, but is up 8.4 percent from the same time last year.

Education-related construction spending fell 4 percent for the month and is down 6 percent on a year-over-year basis.

Commercial construction spending fell 1.4 percent in June but is up 9.7 percent on a year-over-year basis.

Lodging construction spending is down 3 percent on a monthly basis but is up 19 percent on a year-over-year basis.

Spending in the water supply category fell 4.5 percent on both monthly and yearly bases.

Construction spending in the transportation category fell 0.6 percent on a monthly basis but has expanded by 6 percent on an annual basis.

Amusement and recreation-related construction spending fell 1.1 percent on a monthly basis but is up 9.2 percent from the same time last year.

Highway and street-related construction spending fell 10.4 percent in June and is down 8.5 percent compared to the same time last year.

Communication construction spending fell 4.9 percent for the month and is down 12.9 percent from the same time last year.

Public safety-related construction spending fell 2.4 percent on a monthly basis and has declined 5.1 percent on a year-over-year basis.

Power construction spending fell 3.3 percent for the month, but is 19 percent higher than at the same time one year ago.

spending_8 1To view the previous employment report, click here

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