Tag Archive for 'contractors'

Wells Fargo Reports: Housing Starts Bounce Back in September

Housing starts rose 6.3 percent in September, pulling the annual pace of new home construction back above the 1 million mark. Permits also increased during the month and are now running roughly even with starts. Housing Construction Remains on the Road to Recovery


September’s housing starts and building permits data came in roughly in line with expectations. Starts rose 6.3 percent, with multifamily starts bouncing back 16.7 percent and single-family starts rising 1.1 percent. With the rebound, overall housing starts have risen back above the critical million-unit mark for the second time in the past three months and have averaged a 1.024 million-unit pace over this period. On a year-over-year basis, housing starts look even stronger, with overall starts up 17.8 percent from last September. The year-ago numbers, however, were exceptionally weak, having given way after demand dried up following the Spring 2013 ‘Taper Tantrum” run-up in mortgage rates.

Year-to-date (YTD) sales provide a better approximation of the strength of the housing market. Overall starts have totaled 761,000 units through the first nine months of this year, which is 9.5 percent higher than the same period last year. If we were to hold that pace through the end of the year, that would translate into 978,000 starts for 2014. Our forecast is slightly higher than that, calling for 990,000 starts. Multifamily units accounted for most of the increase, with YTD starts up 22 percent. Apartment construction likely accounts for most of that gain, as the bulk of the increase in multifamily starts has been in projects with 5 units or more. Starts of single-family homes are also running slightly ahead of their year-ago pace, with YTD single-family starts up 3.8 percent from 2013.

Building permits rose slightly more than expected, rising 1.5 percent. Multifamily units accounted for all of that gain. There appears to be a rush to get new apartment projects started while financing is flowing relatively easily. Indeed, many of the most active apartment markets are beginning to look a little boom-like. Apartment vacancy rates remain low, but have likely bottomed for the cycle. We still expect the level of multifamily starts to remain strong, however, as increased condominium and townhome construction offsets any cutback in apartment starts.

Permits for new single-family homes fell 0.5 percent in September and have now fallen by about that magnitude for three straight months. While the declines have all been relatively modest, single-family permits are now running slightly below starts, suggesting that starts may decline slightly in the coming months. The drop is not all that surprising. New home inventories have picked up slightly in recent months and sales momentum appears to be slowing. The Wells Fargo/NAHB Home Builders Index fell 5 points in October, with buyer traffic showing a modest drop. Builders are still upbeat about future sales, however, and the recent drop in mortgage rates and moderation in home prices should help reverse the recent slide in housing affordability.

Source: U.S. Department of Commerce and Wells Fargo Securities, LLC

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Strata Systems, Inc. Hires Midwest Regional Sales Manager

Scott Czewski, P.E. Midwest Regional Sales Manager

Scott Czewski, P.E. Midwest Regional Sales Manager

Soil reinforcement product manufacturer and distributor, Strata Systems, Inc., has recently selected Scott Czewski, P.E. as its new Midwest Regional Sales ManagerCzewski joins Strata as part of an initiative to develop new business opportunities in the Midwest, and in Strata’s growing base reinforcement and road infrastructure business, and to manage all of Strata’s existing partners.  He’ll service all Midwestern states from Texas, north to the Canadian border and east to Indiana.

Czewski was selected due to his extensive civil engineering and sales background, which totals more than 15 years. He was previously employed at CSI Geoturf in Michigan as a project consultant where he generated engineering specifications for products, developed concepts and methodologies for cost-effective design and performed internal sales and installation training. Czewski holds a Bachelor of Science in civil engineering from Michigan State University and is a licensed professional engineer.

To learn more about Strata Systems, Inc., visit www.geogrid.com.


ABC Reports: Construction Materials Prices Inch Down in September

CEU2“The decline in oil prices has been simply stunning and is largely in response to growing evidence of weakness in Europe.”—ABC Chief Economist Anirban Basu.

PPI_10 15 2014Construction materials prices inched down 0.1 in September, but rose 1.6 percent compared to the same time last year, according to the U.S. Department of Labor’s Oct. 15 Producer Price Index. Prices for inputs to construction industries have remained unchanged from June to August—the longest such period since the price index for construction inputs began in 1986. Inputs to nonresidential construction fell 0.2 percent for the month, but were 1 percent higher than in September 2013.

Crude energy materials prices declined 1 percent in September and are 7.9 percent lower than one year ago. Natural gas prices climbed 4 percent in September after decreasing in the three previous months. However, on a year-over-year basis, natural gas prices have expanded for 22 consecutive months.

“The decline in oil prices has been simply stunning and is largely in response to growing evidence of weakness in Europe,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Forecasts of European economic performance are seemingly being downgraded on a daily basis, including forecasts of Germany’s economy, which heretofore has been a reasonably strong performer.”

“Without the decline in oil prices, which could fall even further looking ahead, materials prices in the aggregate would not have decreased in September,” said Basu. “In fact, a number of materials prices actually rose during the month, including iron and steel (0.5 percent) and softwood lumber (2.7 percent). Stakeholders also should note that the U.S. dollar has been rising for much of 2014, which has a tendency to suppress materials price increases.”

The following materials prices increased in September.

  • Softwood lumber prices expanded 2.7 percent and are 10.2 percent higher than one year ago.
  • Prices for plumbing fixtures expanded 0.1 percent in September and are up 3.1 percent on a year-over-year basis.
  • Steel mill products prices rose 0.1 percent for the month and are 4.7 percent higher than one year ago.
  • Nonferrous wire and cable prices grew 0.1 percent on a monthly basis, but are unchanged from one year ago.
  • Prices for prepared asphalt, tar roofing, and siding expanded 0.2 percent for the month, but are down 9.8 percent on a year-ago basis.
  • Iron and steel prices expanded 0.5 percent in September and are up 4.6 percent from the same time last year.
  • Natural gas prices expanded 4 percent in September and are 9.9 percent higher than one year ago.

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

  • Concrete products prices fell 0.3 percent in September, but are up 3.6 percent on a year-over-year basis.
  • Fabricated structural metal products remained flat for the month and have expanded 1.9 percent on a year-over-year basis.
  • Crude petroleum prices fell 3.9 percent in September and are down 15.5 percent from the same time last year.
  • Crude energy materials prices fell 1 percent in September and are 7.9 percent lower year over year.

To view the previous Producer Prices Index report, click here

Wells Fargo Reports: Dodge Momentum Index Retreats in September

Wells_Fargo_Securities_logoThe Dodge Momentum Index (DMI) dropped to 115.8 in September, from a downwardly revised 116.6 reading the month prior. Commercial building and institutional building plans both fell during the month.

Setback in Planning Activity

  • After a strong first half of the year, the Dodge Momentum Index (DMI) fell in each of the past three months and is down a collective 7 percent. Despite the string of weak readings, the DMI is up 11 percent over the past three months relative to the same period one- year earlier.
  • The drop in this month’s DMI reading was broad based, with commercial building falling by 0.8 percent and institutional building plans decreasing 0.4 percent.

DMI Still Showing Promising Signs of Growth

  • Despite recent weakness, the DMI is still up 8 percent year-overyear, marking almost two years of positive growth. The trend is consistent with the American Institute of Architects (AIA) billings index showing that weaker commercial building is on the horizon, while institutional construction gradually improves.
  • Even with September’s drop, two substantial new projects started the planning process in Las Vegas, NV and New York, NY, valued at $500 million and $130 million, respectively.

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Wells Fargo Reports: Employment: Growth Resumes, Lower Unemployment Rate

Wells_Fargo_Securities_logoJobs were up 248,000 in September and 224,000 on average over the past three months. Gains were broadly based while the unemployment rate fell to 5.9 percent as the labor force participation rate declined again. Job Gains Suggest Sustained, Not Accelerating, Growth

Job growth remains broadly based but is not running at a higher pace than we have already seen so far this year. Over the past three months, there have been steady gains in many sectors—federal government and information being the exception (first graph).

Meanwhile, the aggregate hours index is up a solid 2.8 percent over the past three months which signals a solid gain in third quarter GDP. Average weekly hours have risen in the overall private sector and the private service-providing sectors compared to a year ago.

Our outlook remains for GDP growth of 3.1 percent in the third quarter, which we expect to be easily achievable, and 5.9 percent for the unemployment rate.

Household Picture Continues to Slowly Improve

Data from the household survey also showed modest improvement in the labor market. The unemployment rate fell to 5.9 percent amid a solid gain; however, the labor force participation rate fell again, this time to 62.7 percent, the lowest reading since the 1970s. The drop in the unemployment rate has been accompanied by a modest rise in the wage rates (middle graph). Over the past year, the decline in the unemployment rate has been primarily for adult men and women, as well as a drop across all four levels of education surveyed. However, participation rates for adult men and women have also declined. As a note, the total civilian nonlabor force now stands at 92.6 million, an all-time high and can be compared to about 80 million at the start of the economic recovery.

Meanwhile, average hourly earnings for all private sector employers have edged down and are at 2.0 percent over the past year. We continue to expect the unemployment rate to fall, combined with a pickup in inflation that will prompt the market to discount a Fed move in the funds rate by mid-2015.

Income Growth: Continued Gains

Over the past six months, the combination of broad-based gains in jobs and improved average hourly earnings indicates continued improvement in our income proxy and a shift up for income compared to 2011-2013 (bottom graph). Therefore, consumer income growth remains a potential source of an upside surprise to economic growth in the second half of 2015.

We have already seen a pickup in light vehicle sales and home sales so far this year. Our outlook is for better overall consumer spending in the second half of this year relative to the first half. Real disposable income in 2014, as well as in 2015, should be much stronger than 2013. Better income, and thereby, consumption growth will sustain the current expansion despite the weakness in overseas markets. This will add to the financial disparity in performance for the dollar, equity markets and rates.

Source: U.S. Department of Labor and Wells Fargo Securities, LLC 1 2 3