Tag Archive for 'Associated Builders and Contractors'

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ABC Reports: Construction Materials Prices Dip in December

CEU2“The U.S. economy has performed handsomely over the past nine months, according to most metrics, and conventional wisdom suggests that it can continue to expand at or above trend rates of growth.”—ABC Chief Economist Anirban Basu

PPI December 20142Construction input prices dipped 1.4 percent during the final month of 2014 and are down nearly 1 percent on a year-over-year basis, according to the Jan. 15 producer price index release from the U.S. Department of Labor. Inputs to nonresidential construction fell even farther, down 1.7 percent for the month and 1.9 percent year over year. December’s report marks the sharpest decline in input prices since late 2008 during the global financial crisis and the fifth consecutive month construction materials prices have failed to rise.

“Without question, financial markets have been unnerved by the recent declines in oil, copper and other commodity prices, although that jitteriness does not necessarily imply a serious economic problem in America,” said Associated Builders and Contractors Chief Economist Anirban Basu. “The fact is the U.S. economy has performed handsomely over the past nine months, according to most metrics, and conventional wisdom suggests that it can continue to expand at or above trend rates of growth despite economic weakening in Europe, China and elsewhere. This is further evidenced by the World Bank’s recent downgrade of its forecasts for global growth in 2015 and 2016, while it upgraded its outlook for the United States.

“Overall, the view that U.S. domestic demand for construction services and most other services continues to expand is consistent with the fact that some domestically produced and consumed materials actually registered price increases last month,” said Basu. “Note that concrete prices are up by 5 percent on a year-over-year basis while natural gas prices are up by 10 percent.”

The following materials prices increased in December.

  • Prices for plumbing fixtures expanded 0.1 percent in December and are up 3.1 percent on a year-over-year basis.
  • Concrete products prices expanded 0.7 percent in December and are up 5 percent on a yearly basis.
  • Natural gas prices expanded 19.7 percent in December and are 10 percent higher than one year ago.
  • Fabricated structural metal product prices grew 0.3 for the month and have expanded 1.5 percent on a year-over-year basis.

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

  • Iron and steel prices fell 1 percent in December and are down 3.9 percent from the same time last year.
  • Nonferrous wire and cable prices fell 1.6 percent on a monthly basis and 1.5 percent on a yearly basis.
  • Prices for prepared asphalt, tar roofing, and siding fell 1 percent for the month but are up 1.9 percent on a year-ago basis.
  • Steel mill products prices fell 1.3 percent for the month but are 0.4 percent higher than one year ago.
  • Softwood lumber prices fell 1.3 percent in December but are 0.3 percent higher than one year ago.
  • Crude petroleum prices fell 18.9 percent in December and are down 37.1 percent from the same time last year.
  • Crude energy materials prices fell 4.7 percent in December but are 19.6 percent lower year-over-year.

To view the previous PPI report, click here.

ABC Reports: Nonresidential Construction Spending Dips in November

CEU2“Nonresidential construction spending dipped in November, ending four consecutive months of spending growth”—ABC Chief Economist Anirban Basu.

1.2.15 spendingNonresidential construction spending fell 1 percent on a monthly basis in November, but has still managed to expand 4 percent on a year-over-year basis according to the Jan. 2nd release from the U.S. Census Bureau. Spending for the month totaled $617 billion on a seasonally adjusted, annualized basis. Moreover, the government revised the October spending figure up from $611.8 billion to $622.9 billion.

“November’s drop in nonresidential construction spending ends four consecutive months of spending growth, but represents only a minor dip in the industry’s momentum,” said Associated Builders and Contractors Chief Economist Anirban Basu. “November’s figure would have represented a continuation of nonresidential spending’s steady recovery were it not for a sizable upward revision to October’s data (+$11.1 billion). Through the first 11 months of 2014, nonresidential spending is up 6.6 percent from the same point in 2013 and with only December’s spending data yet to be revealed, it is a near certainty that yearly nonresidential spending will top the $600 billion mark for the first time in the past five years.

“Conditions remain conducive to continued construction spending growth,” said Basu. “Both the quantity and quality of job growth continues to improve, which will fuel the ongoing recovery in office-related spending. The dip in oil prices may provide the strongest headwind for construction spending growth. Not only will inexpensive fuel greenlight construction projects that may otherwise be stalled, it also serves to boost consumer spending. This in turn may lead to more construction starts, specifically in the lodging and amusement and recreation categories.

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

  • Lodging construction spending ticked up 0.1 percent on a monthly basis and is up 11.3 percent on a year-over-year basis.
  • Communication construction spending expanded 0.5 percent for the month, but is down 17.5 percent on an annual basis.
  • Sewage and waste disposal-related construction spending gained 2.6 percent for the month and has grown 13.6 percent on a 12-month basis.
  • Highway and street-related construction spending grew 0.3 percent in November and is up 5.7 percent compared to the same time last year.
  • Power construction spending grew 0.3 percent for the month and is 5.7 percent higher than at the same time one year ago.

Spending in 11 nonresidential construction subsectors declined in November.

  • Conservation and development-related construction spending fell 6.5 percent for the month but is up 29 percent on a yearly basis.
  • Health care-related construction spending fell 4.4 percent for the month and is down 7.5 percent on an annual basis.
  • Education-related construction spending fell 2 percent for the month and is up 3.2 percent on a year-over-year basis.
  • Spending in the water supply category fell 1.6 percent from October and down 2.3 percent lower than at the same time last year.
  • Construction spending in the transportation category fell 0.3 percent on a monthly basis but has expanded by 5.3 percent on an annual basis.
  • Public safety-related construction spending fell 5.3 percent on a monthly basis and is down 8.6 percent on a year-over-year basis.
  • Commercial construction spending lost 1.9 percent in November but is up 8.4 percent on a year-over-year basis.
  • Office-related construction spending fell by 1.7 percent in November but is up 14.7 percent from the same time one year ago.
  • Manufacturing related spending was flat in November and is up 21 percent for the year.
  • Amusement and recreation-related construction spending fell 2.2 percent on a monthly basis and is up 4.8 percent from the same time last year.
  • Religious spending fell 2.9 percent for the month and is down 0.3 percent from the same time last year.

To view the previous spending report, click here.

ABC Reports: Nonresidential Construction Adds Nearly 5,000 Jobs in November

CEU2“Nonresidential construction added nearly 5,000 jobs in November and the outlook remains positive.”—ABC Chief Economist Anirban Basu.

Employment November 2014The U.S. construction industry added 20,000 jobs in November, with nonresidential construction contributing 4,900 of them, according to the Bureau of Labor Statistics preliminary estimate released Dec. 5. October’s overall construction estimate was revised downward from 12,000 to 7,000 net new jobs and nonresidential construction lost 2,100 jobs in October, after revisions.

“Nonresidential construction added nearly 5,000 jobs in November and the outlook remains positive,” said Associated Builders and Contractors Chief Economist Anirban Basu. “It is important to note that the greatest constraint on nonresidential job growth may no longer be a lack of demand for construction services, but rather a lack of supply of sufficiently skilled workers. Growing demand for human capital coupled with tighter labor markets strongly suggests that industry wage pressures will expand in 2015, perhaps to the extent that margins will be rendered too thin for many firms, even in the face of rising demand for services.

“While the national construction unemployment rate expanded from 6.4 percent to 7.5 percent on a non-seasonally adjusted basis in November, this is primarily due to seasonal factors,” Basu explained. “The construction unemployment rate has historically expanded during the colder months of the year, and November’s figure should not be seen as a cause for concern.

“The U.S. economy has shifted into a higher gear,” said Basu. “A combination of surging stock prices, lower energy costs, rising consumer confidence, solid job creation, and improvement in the quality of jobs being added has helped move the economy closer to a sustained 3 percent rate of growth. For the most part, this represents good news for the nonresidential construction industry.”

According to the Bureau of Labor Statistics’ household survey, the national unemployment rate remained unchanged at 5.8 percent in November. The labor force once again expanded in October, growing by 119,000 persons. After shrinking in August and September, the labor force has now expanded in consecutive months. The labor force participation rate remained unchanged at 62.8 percent in November.

Construction employment for the month and the past year breaks down as follows:

  • Nonresidential building construction employment fell by 2,400 jobs for the month but is up by 9,500 jobs, or 1.4 percent, since November 2013.
  • Residential building construction employment expanded by 3,400 jobs in November and is up by 47,300 jobs, or 7.5 percent, on an annual basis.
  • Nonresidential specialty trade contractors added 7,300 jobs for the month and employment in that category is up by 47,400 jobs, or 2.2 percent, from the same time one year ago.
  • Residential specialty trade contractors gained 13,300 jobs in November and have added 75,500 jobs, or 4.8 percent, since November 2013.
  • The heavy and civil engineering construction segment lost 1,300 jobs in November and job totals are up by 33,200, or 3.7, percent on a year-over-year basis.

To view the previous employment report, click here

ABC Reports: Nonresidential Construction Spending Rebounds in October

CEU2“This month’s increase in nonresidential construction spending is far more consistent with the anecdotal information floating around the industry.”—ABC Chief Economist Anirban Basu.

Construction Spending November 2014Nonresidential construction spending bounced back in October, expanding 1 percent on a monthly basis and 4.3 percent year over year, according to a Dec. 2 release from the U.S. Census Bureau. Spending for the month totaled $611.8 billion on a seasonally adjusted, annualized basis. Additionally, the government revised the September spending figure up to $605.8 billion from $596.1 billion.

“This month’s increase in nonresidential construction spending is far more consistent with the anecdotal information floating around the industry, which generally indicates that firms are becoming busier and that backlog is expanding,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Although last month’s numbers for nonresidential construction spending and employment were disappointing and could have implied the nation’s nonresidential construction recovery is stalling, that is not the case.

“The outlook for 2015 remains upbeat,” said Basu. “The economy has gained momentum over the past six to seven months and that is consistent with more aggressive construction starts and spending during the year to come. Even as the economy has gained momentum, the Federal Reserve has remained extraordinarily accommodative due in part to benign inflation readings. Low interest rates combined with solid economic momentum likely mean expansion for the nonresidential construction industry during the year ahead.”

11 of 16 nonresidential construction subsectors posted monthly increases in spending.

  • Office-related construction spending grew by 2 percent in October and is up 16.3 percent from the same time one year ago.
  • Lodging construction spending is up 3.3 percent on a monthly basis and is up 15.9 percent on a year-over-year basis.
  • Conservation and development-related construction spending grew 4.6 percent for the month and is up 33.1 percent on a yearly basis.
  • Spending in the water supply category expanded 0.9 percent on a monthly basis, but is down 1.8 percent on a year-over-year basis.
  • Amusement and recreation-related construction spending expanded 2.2 percent in October and is up 1.4 percent from the same time last year.
  • Manufacturing-related spending expanded 3.4 percent on a monthly basis and is up 22.2 percent on an annual basis.
  • Health care-related construction spending expanded 0.6 percent for the month but is down 8.4 percent from the same time last year.
  • Education-related construction spending expanded 1.8 percent for the month and is up 3.6 percent on a year-over-year basis.
  • Construction spending in the transportation category expanded 2.7 percent on a monthly basis and has expanded 1.6 percent on an annual basis.
  • Highway and street-related construction spending expanded 1.2 percent in October and is up 0.1 percent compared to the same time last year.
  • Public safety-related construction spending expanded 11.6 percent on a monthly basis but is down 1.2 percent on a year-over-year basis.

Monthly spending in five nonresidential construction subsectors declined in October.

  • Commercial construction spending fell 2.2 percent for the month but has grown 9.1 percent on a year-over-year basis.
  • Communication construction spending declined 1.9 percent for the month and is down 9.4 percent for the year.
  • Religious construction spending fell 3.7 percent for the month and is down 4.6 percent from the same time last year.
  • Sewage and waste disposal-related construction spending declined 0.4 percent for the month and is down 0.2 percent on a 12-month basis.
  • Power construction spending fell 1 percent for the month but is 0.7 percent higher than at the same time one year ago.

To view the previous spending report, click here

ABC Reports: GDP Shows Increasing Positivity for Nonresidential Construction

CEU2-1“The improving confidence of consumers, business owners, and real estate developers, among others, suggests that additional momentum is likely, ” —ABC Chief Economist Anirban Basu.

GDP_Q3_2014-1Nonresidential fixed investment grew 5.5 percent in the third quarter after expanding 9.7 percent in the second quarter, according to the Bureau of Economic Analysis’ Oct. 30 gross domestic product (GDP) report. It has now expanded by greater than 5 percent in four of the past five quarters. In addition, investment in equipment increased 7.2 percent, while investment in nonresidential structures increased 3.8 percent.

Real gross domestic product (GDP) expanded 3.5 percent (seasonally adjusted annual rate) during the third quarter, following a 4.6 increase in the second quarter.

“It has been rare for the U.S. economy to record two consecutive good quarters since the recovery began in mid-2009,” said Associated Builders and Contractors Chief Economist Anirban Basu. “The dominant pattern has been one of a good quarter followed by a bad quarter. This lack of consistent momentum has also been seen with construction spending growth and in other leading indicators, such as the Architecture Billings Index and ABC’s own Construction Backlog Indicator.”

“However, the improving confidence of consumers, business owners, and real estate developers, among others, suggests that additional momentum is likely,” Basu said. As an example, the Consumer Confidence Index attained a seven-year high in October. The implication is that nonresidential construction spending should continue to recover, with growth continuing to be concentrated in privately financed segments.”

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

  • Personal consumption expenditures added 1.2 percent to GDP after contributing 1.8 percent in the second quarter.
  • Spending on goods grew 11 percent after expanding 14.3 percent in the prior quarter.
  • Real final sales of domestically produced output, minus changes in private inventories, increased 4.2 percent after a 3.2 percent increase in the second quarter.
  • Federal government spending expanded by 10 percent following a 0.9 percent decrease in the prior quarter.
  • Nondefense spending expanded 0.5 percent after decreasing by 3.8 percent in the second quarter.
  • National defense spending expanded 16 percent after inching up 0.9 percent in the previous quarter.
  • State and local government spending expanded 1.3 percent during the third quarter after growing 3.4 percent in the second quarter.

To view the previous GDP report, click here.