Tag Archive for 'Associated Builders and Contractors'

Page 2 of 35

ABC Reports: Construction Unemployment Rates Improve in 32 States Year-Over-Year

1291931467352794367September not seasonally adjusted (NSA) construction unemployment rates improved in 32 states and the nation on a year-over-year basis, according to analysis released today by Associated Builders and Contractors (ABC). The national NSA construction unemployment rate of 5.2 percent was 0.3 percent lower than a year ago, according to data from the Bureau of Labor Statistics (BLS).

This was the lowest September construction unemployment rate since 2000, when it was 4.6 percent. BLS data also reported that the industry employed 208,000 more people than in September 2015.

“September 2016 marks the sixth year of uninterrupted monthly year-over-year rate decreases in the national construction unemployment rate that began in October 2010,” said Bernard M. Markstein, Ph.D., president and chief economist of Markstein Advisors, who conducted the analysis for ABC. “These industry-specific unemployment rates are not seasonally adjusted, so it is important to note states’ performance on a year-ago basis. The year-over-year improvement in the national unemployment rate as well as in the rates of 32 states demonstrates the steady improvement in the construction job market over the past year.”

Like August, the historical pattern for change in the national NSA construction unemployment rate from the month before is ambiguous. Starting in 2000, when the BLS data for this series begins, through 2015, the change in the September rate from August has fallen eight times, risen seven times and been unchanged once. This year’s September increase of 0.1 percent adds an eighth year that the rate has risen from August.

Eighteen states did post declines in their estimated construction unemployment rates from August. Five states had unchanged rates.

View states ranked by their construction unemployment rate, their year-over-year improvement in construction employment and monthly improvement in construction employment.

View states unemployment rate for all industries.

The Top Five States

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

  1.  Colorado
  2.  South Dakota
  3.  Idaho
  4. North Dakota (tie with Idaho)
  5.  Massachusetts

Four states—Colorado, Idaho, Massachusetts and North Dakota—were also among the top five in August. Colorado had the lowest rate among the states in September at 2.4 percent, the state’s lowest September unemployment rate on record. South Dakota, with a 2.9 percent construction unemployment rate, moved up to the second lowest rate in September and also had the second largest year-over-year drop, down 1.3 percent. Idaho and North Dakota tied for the third lowest rate in September with a 3 percent rate, up from fifth lowest and down from the lowest rate in August respectively. Massachusetts tied with South Dakota and Arizona for the biggest year-over-year improvement by shedding 1.3 percent from its construction unemployment rate in posting the fifth lowest rate in September at 3.3 percent rate, also the state’s lowest rate.

Wyoming dropped from the top five in August and experienced the largest monthly and year-over-year jump in its NSA construction unemployment rate—up 2.7 percent and 1.7 percent, respectively—to 5.3 percent.

Meanwhile, Vermont fell from tied with Idaho for fifth lowest in August to tied with Michigan for 13th lowest in September with a 4.3 percent rate. Vermont also had the fourth largest monthly increase, up 1.1 percent from August.

The Bottom Five States

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

  1.  Alabama
  2.  Pennsylvania
  3.  Rhode Island
  4.  New Mexico
  5.  Alaska

All of these states were also among the five states with the highest construction unemployment rates in August.

Alaska, with a 10.1 percent rate, had the highest estimated rate in September and saw the second largest increase from August at 2.5 percent. On a positive note, Alaska’s September 2016 rate was its lowest September rate since 2002. New Mexico had the second highest construction unemployment rate in September, 8.6 percent, although it also had the second largest monthly drop in its rate—down 0.9 percent. Rhode Island had its lowest September construction unemployment rate since 2007, but was still the third highest rate in September at 8.5 percent. Pennsylvania had the fourth highest estimated NSA construction unemployment rate in September, 8.1 percent, and the second largest year-over-year increase among the states, up 1.5 percent. Alabama had the fifth highest estimated construction unemployment rate in September, with a 7.6 percent rate, its second lowest September rate since 2007 (just above 2015’s 7.5 percent).

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

3052611477917771284 3052611477917793578 3052611477917814565

ABC Reports: Nonresidential Fixed Investment Expands Again During Solid Third Quarter

1291931467352794367Real gross domestic product (GDP) expanded 2.9 percent on a seasonally adjusted annualized rate during the third quarter of 2016, according to an analysis of Bureau of Economic Analysis data released today by Associated Builders and Contractors (ABC). This follows a 1.4 percent increase during the second quarter and represents the tenth consecutive quarter of economic expansion.

Nonresidential fixed investment, a category closely aligned with construction and other forms of business investment, expanded at a 1.2 percent annualized rate during the third quarter after growing 1 percent during the second. Investment in structures led the way, increasing by 5.4 percent in the third quarter after falling 2.1 percent during the second. Investment in equipment fell 2.7 percent for the quarter, while investment in intellectual property products expanded 4 percent. Residential investment continued to fall, declining 6.2 percent in the third quarter after falling 7.7 percent during the second.

“Today’s GDP release will generally be viewed favorably both for the construction industry and for the larger economy,” said ABC Chief Economist Anirban Basu. “The acceleration in real GDP growth was driven by a combination of factors, including an upturn in exports, a smaller decrease in state and local government spending and an upturn in federal government spending. One of the biggest impacts came from greater private inventory investment, likely in response to expectations for reasonably strong consumer spending. Growth in personal consumption expenditures was responsible for almost half of third quarter GDP growth. However, this build in inventories is likely to subtract from economic growth in future quarters, though not massively.

“According to the most recent data available from the Bureau of Economic Analysis, nonresidential investment in structures has contributed little to GDP over the past five quarters,” said Basu. “While there are certain categories of nonresidential construction that have been active in terms of spending growth, including the office, lodging and commercial categories, for the most part spending growth has been lackluster.

“Third quarter growth was solid, but future quarters may not be as good,” said Basu. “The economy will have to deal with a number of headwinds going forward, including a stronger dollar, building inflationary pressures and higher interest rates. Consumer spending growth will continue to lead the recovery. While this will help support construction spending in certain categories, including distribution centers, nonresidential investment in structures is likely to expand only slowly in early 2017.”

The following highlights emerged from today’s third quarter GDP release. All growth figures are presented as seasonally adjusted annualized rates:

  • Personal consumption expenditures expanded 2.1 percent on an annualized basis during the third quarter of 2016 after growing 4.3 percent during the second quarter of 2016.
  • Spending on goods rose 2.2 percent during the third quarter after expanding by 7.1 percent during the previous quarter.
  • Real final sales of domestically produced output increased 2.3 percent in the third quarter after increasing 2.6 percent in the second.
  • Federal government spending expanded 2.5 percent in the year’s third quarter after contracting during each of the prior two quarters.
  • Nondefense government spending increased 3 percent during the quarter following an increase of 3.8 percent during the second.
  • National defense spending grew by 2.1 percent during the third quarter after registering a 3.2 percent decline in the previous quarter.
  • State and local government spending fell by 0.7 percent in the third quarter after falling 2.5 percent in the second quarter.

3052611477671651007

ABC Reports: Construction Input Prices Begin to Trend Higher

1291931467352794367Both nonresidential and overall construction input prices increased in September, with natural gas and crude petroleum prices bouncing back, according to analysis of the U.S. Bureau of Labor Statistics (BLS) Producer Price Index released today by Associated Builders and Contractors (ABC). The BLS data show that nonresidential input prices expanded 0.3 percent on a monthly basis in September, and overall construction prices also rose 0.3 percent on a monthly basis after declining 0.2 percent in August.

It is important to note that nonresidential input construction prices are now higher on a year-over-year basis for the first time since November 2014. Just four of the 11 key nonresidential construction input prices declined on a monthly basis, and only one—nonferrous wire and cable—experienced a year-over-year decline.

“The rise in material prices both on a monthly and year-over-year basis is not good news for U.S. nonresidential construction firms,” said ABC Chief Economist Anirban Basu. “For roughly two years, declining energy prices had wrung much of the inflation out of the economy, allowing interest rates to remain low and the Federal Reserve to remain fixated on guiding the nation toward full employment. Energy prices are no longer falling. Moreover, wage and healthcare inflation are building, which could drive interest rates higher next year. That scenario is not good for real estate valuations and nonresidential construction.

“Additionally, many contractors note that buyers of construction services continue to relentlessly pursue lower construction charges, even though many contractors are quite busy,” said Basu. “Labor and other costs are going up, and this has a tendency to squeeze margins. To the extent that materials prices begin to rise more forcefully, this could further compress nonresidential construction margins.

“The challenge for many contractors is to pass materials costs increases along to users of construction services in an effort to sustain margins,” said Basu. “Evidence suggests that this was not a major issue for construction firms prior to the Great Recession, but purchasers of construction services are now much less likely to accept significant cost inflation. The good news is that with the U.S. dollar strengthening recently, sharp month-over-month increases in many construction materials prices are unlikely in the near term.”

September Construction Input Prices

3052611476459441231 3052611476459459409

 

ABC Reports: Nonresidential Spending Slips in August, Public Sector Spending Declines Faster than Private

ABC

Nonresidential construction spending fell for a second consecutive month in August, according to analysis of U.S. Census Bureau released today by Associated Builders and Contractors (ABC). Nonresidential spending totaled $686.6 billion on a seasonally adjusted, annualized basis for the month, 1.1 percent lower than July’s total of $694.1 billion (revised down from $701 billion) and 1.3 percent below August 2015’s figure.

Private nonresidential construction spending fell just 0.4 percent for the month, while its public sector counterpart shrank 2 percent. Four of the five largest nonresidential subsectors—power, highway and street, commercial and manufacturing—combined to fall 2.2 percent on a monthly basis.

“Stakeholders in the nation’s nonresidential construction industry have become accustomed to seeing weak spending data. However, today’s report represents a bit of a departure from previous reports,” said ABC Chief Economist Anirban Basu. “While previous weak spending reports can almost completely be explained by diminished public construction spending, today’s report also revealed emerging weakness in private spending.

“There are some noteworthy exceptions,” said Basu. “Office-related construction spending continued to surge higher, rising 2 percent for the month and up a whopping 24 percent on a year-over-year basis. Construction spending related to lodging rose 1.2 percent on a monthly basis and is nearly 16 percent higher than the year-ago level. Foreign investment in U.S. commercial real estate heavily influences these two segments, which has helped produce both higher asset prices and more construction.

“Given the passage of a federal highway bill last year, one might have expected spending growth in the highway/street and transportation categories,” said Basu. “Those expectations have been unmet thus far. Transportation-related construction spending dipped by more than 6 percent in August and by more than 11 percent on a year-over-year basis. Highway and street spending is down by more than 8 percent on a year-ago basis, and was down nearly 3 percent for the month.

“There are a number of theories at work, including the 2016 election cycle, which has led to some decision-makers putting projects on hold,” said Basu. “Government spending generally remains weak, and there are some indications that private lending standards are tightening due to a combination of growing concern among financial industry regulators and bankers that real estate bubbles are forming again in certain communities and segments.”

3052611475514277061

ABC Reports: Construction Employment Falters in August

ABC The U.S. construction industry lost 6,000 net jobs in August according to an analysis of U.S. Bureau of Labor Statistics (BLS) data released today by Associated Builders and Contractors (ABC). BLS also downwardly revised July’s estimate from 14,000 net new jobs to 11,000 net new jobs meaning that the construction industry has lost 25,000 net jobs since April after adding 68,000 through the first three months of 2016.

The nonresidential sector lost 10,700 net jobs in August after adding 9,600 jobs in July (revised down from 11,500). Employment in the heavy and civil engineering sector fell for the fourth time in five months, declining by 6,500 jobs on net, an indication of still weak infrastructure investment. The construction industry’s unemployment rate rose to 5.1 percent in August, but is still 3.4 percentage points lower than it was at the beginning of 2016.

“Today’s downbeat employment data came less than twenty-four hours after yesterday’s relatively upbeat nonresidential construction spending report,” said ABC Chief Economist Anirban Basu. “This pattern of good news followed by bad news is nothing new and continues to paint a confusing picture for nonresidential construction activity in the U.S.

“Most contractors continue to report decent backlog and although profitability remains a challenge, margins are thicker than they were several years ago,” said Basu. “Construction firms continue to complain about a lack of appropriately trained workers and construction wage costs are rising. These are all signs of an industry that remains busy.

“However, the data are also consistent with the notion that the pace of expansion in nonresidential construction activity has slowed,” warned Basu. “Nonresidential construction spending has expanded by less than 2 percent over the past year. The biggest culprit continues to be a lack of public sector capital spending on infrastructure, whether in the form of roads or water systems. Survey data regarding commercial real estate lending standards indicate that lending standards are beginning to tighten. While spending in office, lodging, and commercial categories has expanded significantly over the past year, the pace of growth is beginning to be constrained by a combination of regulatory pressures and growing concerns regarding overbuilding in certain key communities and product segments.

“The other consideration is that job growth remains rapid in a number of other key economic segments, including in e-commerce/distribution, retail, and a host of services,” said Basu. “This may be tempting some construction workers away from the industry, helping to explain continued low industry unemployment despite the job losses experienced in recent months.”

The national unemployment rate remained unchanged for a third consecutive month and stands at 4.9 percent. The labor force expanded by 176,000 persons in August and has grown by roughly one million persons over the past three months. Labor force participation stands at 62.8 percent.

3052611472826813136 3052611472826824743