Tag Archive for 'economy'

Volvo CE announces headquarters move from Brussels, Belgium to Gothenburg, Sweden

 

Volvo Construction Equipment (Volvo CE) has today announced that the company’s global headquarters will move from its current location in Brussels, Belgium to Gothenburg, Sweden. The relocation will facilitate closer cooperation with the Group’s other business areas and allow for better usage of the competence and resources of the whole Volvo Group.

“Our Brussels location has served us well since the office opened in the 1980s and this move comes at the right time for Volvo CE as we continue to adapt our company to changing global business dynamics. It allows us to be physically closer to the other Volvo business areas and it will facilitate closer cooperation and sharing of best practices,” states Martin Weissburg, President of Volvo CE and Member of the Executive Board of the Volvo Group. “Sweden is also home to approximately 4,000 Volvo CE employees and where some of our largest manufacturing, commercial and technology sites are located,” adds Martin Weissburg.

The Volvo CE headquarters will be operational in Gothenburg in the third quarter of 2017.

ABC Reports: Overall Construction Input Prices Firm in December as Energy Prices Surge

Construction input prices rebounded in December after experiencing a steep decline in November, according to analysis of U.S. Bureau of Labor Statistics data released today by Associated Builders and Contractors (ABC). Input prices rose 0.4 percent for the month and are up 2.1 percent year-over-year, the largest 12-month increase in 30 months.

Nonresidential input prices collectively experienced a slightly larger increase, due in part to surging iron and steel prices, rising 0.6 percent for the month and 2.2 percent on the year. Though a number of input categories have experienced significant increases in prices in recent months, the overall price gains are largely attributable to energy prices. Crude petroleum prices rose 18.9 percent for the month, natural gas prices rose 23.1 percent and unprocessed energy materials rose 14.6 percent. Concrete products and the category that includes prepared asphalt experienced minimal declines in prices in December.

“While there are a number of factors that have contributed to the recent firming in input prices, recent deals made by OPEC and non-OPEC members to suppress oil production is the most consequential,” said ABC Chief Economist Anirban Basu. “While oil prices remain above where they were before production agreements were reached, the price of oil has generally failed to rise much beyond $50.

“Other factors have also led to a steady rise in materials prices including an improving global economy,” said Basu. “While not accelerating dramatically, global economic growth in 2017 is expected to exceed 2016’s performance, with nations like Brazil and Russia no longer mired in deep recessions. U.S. economic growth is also expected to be stronger in 2017, lifting the overall global economic outlook and supporting more bullish commodity markets.

“It is probably too early for contractors to become excessively preoccupied with rising materials prices,” said Basu. “Despite recent signs of economic improvement, massive levels of debt and commercial vacancy in much of the world will constrain both worldwide economic growth and global construction. Moreover, commodity traders among others are well aware that the planet is physically able to supply plenty of oil, natural gas and many other commodities, particularly if prices rise further. That knowledge in and of itself tends to place a lid on input price increases absent a major geopolitical event.”

December Construction Input Prices

Dodge Momentum Index Jumps in December

The Dodge Momentum Index increased 2.9% in December to 136.7 (2000=100) from its revised November reading of 132.8. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. After trending upward over the course of 2016, the Momentum Index is now at an eight-year high, although still more than 25% below its previous peak reached at the end of 2007. December’s gain was due to a 5.7% increase in the commercial component, which more than offset a 1.7% drop in the institutional component. After ending 2015 in a lull, commercial planning intentions posted remarkable strength in 2016, climbing 38% over the year. Meanwhile, institutional planning settled back in 2016, losing 6% after a strong 2015. This suggests that commercial construction activity has more room to grow in 2017 despite being at a more mature phase of its cycle, while planning in the institutional sector has yet to see the benefit of the numerous education-related bond measures passed in recent years. In December, eight projects entered planning each with a value that exceeded $100 million. For the commercial building sector, the leading projects were a $400 million mixed-use building in Atlanta GA, that will include 640,000 square feet of office space and a hotel, and a $351 million office tower in San Francisco CA. The leading institutional projects were a $140 million renovation to the Quicken Loans Arena in Cleveland OH and a $130 million high school in Sherman TX.

About Dodge Data & Analytics: Dodge Data & Analytics is a technology-driven construction project data, analytics and insights provider. Dodge provides trusted market intelligence that helps construction professionals grow their business, and is redefining and recreating the business tools and processes on which the industry relies. Dodge is creating an integrated platform that unifies and simplifies the design, bid and build process, bringing data on people, projects and products into a single hub for the entire industry, from building product manufacturers to contractors and specialty trades to architects and engineers. The company’s www.construction.comproducts include Dodge Global Network, Dodge PlanRoom, Dodge PipeLine, Dodge SpecShare, Dodge BuildShare, Dodge MarketShare, and the Sweets family of products. To learn more, visit www.construction.com.

Wells Fargo Analysis:

DMI Points to Growth in the New Year

  •  The Dodge Momentum Index rose 2.9 percent to 136.7 in December, from November’s downwardly revised reading, and is up almost 17 percent year over year. However, the index still remains 25 percent below its 2007 peak. Despite a strong year- end reading, we look for moderate gains in private nonresidential spending in 2017 as momentum in the institutional sector, especially health care, slows further and other forward-looking indicators (e.g. Architecture Billings Index) point to moderation in construction activity.

Institutional Planning Loses Momentum

  • In December, commercial planning grew 5.7 percent, which more than offset the 1.7 percent decline in institutional. Year over year, commercial jumped almost 40 percent, and the three-month moving average remained positive during the month, signaling the sector still has room to grow.
  • On the other hand, institutional planning is down 6 percent year over year, with the three-month moving average also registering a weak reading. We suspect that open questions around the Affordable Care Act will weigh on the sector in 2017.

AGC Reports:CONSTRUCTION EMPLOYMENT DIPS IN DECEMBER BUT RISING HOURLY EARNINGS, CONTRACTOR OPTIMISM SUGGEST HIRING PAUSE IS DUE TO WORKER SHORTAGE

Association Urges Lawmakers and Public Officials to Increase Support for Craft Worker Training Programs to Address Ongoing Demand for Infrastructure, Private and Residential Construction in 2017
Construction employment slipped by 3,000 jobs in December, while average hourly earnings accelerated, according to an analysis of new government data by the Associated General Contractors of America. Association officials noted that recent construction spending numbers and their own survey of members suggest demand for construction remains strong, suggesting that the lack of hiring may be due to a shortage of available workers.

“This report presents mixed signals about the state of the construction industry,” said Ken Simonson, the association’s chief economist. “Although a dip in employment might normally be a sign of declining demand, in this case the industry is raising wages and taking other steps to attract and retain workers. Construction spending in November hit a 10-year high, with one-month and year-over-year increases in all major segments. Looking ahead, contractors say they expect more work in every category in 2017 than in 2016.”

Construction employment totaled 6,699,000 in December, a decrease of 3,000 from November but an increase of 102,000 or 1.5 percent from a year ago. Average hourly earnings in construction increased 3.0 percent over the past year to $28.42 per hour. Earnings have been rising in recent months at the fastest annual rate since 2009, which Simonson said is evidence that contractors are still eager to expand their headcounts.

Residential construction—comprising residential building and specialty trade contractors—added 9,800 jobs in December and 102,500, or 3.0 percent, compared to a year ago. Nonresidential construction (building, specialty trades, and heavy and civil engineering construction) employment shrank by 13,400 employees in December and was virtually flat (-400 employees, 0.0 percent) over the year.

These numbers contrast with Census Bureau data on construction spending in November that were released on Wednesday, Simonson observed. Those figures showed that overall spending increased 0.9 percent for the month and 4.1 percent over 12 months. Total residential spending was up 1.0 percent and 3.0 percent, respectively, while total nonresidential spending climbed 0.8 percent from October and 4.9 percent from November 2015.

Association officials noted that both the recent spending data and a survey of members that they plan to release on January 10 point to continued construction activity and an eagerness by contractors to hire—if they can find qualified workers. The association urged lawmakers and government officials to expand and fund employment and training programs to equip students and workers with the skills needed to become productive construction employees.

“Contractors are hopeful that demand for infrastructure, private investment and housing will remain strong in 2017,” said Stephen E. Sandherr, the association’s chief executive officer. “But they need more workers to satisfy that demand. Government at all levels must step up its programs to educate and train the next generation of construction craft workers.”

Call in January 10 at 1 p.m. EST for AGC’s 2017 Construction Hiring and Business Forecasts release. Toll-Free Call-in Number: 1 (800) 874-4559; (Canadian Toll Free 1 (800) 696-0876); Verbal Pass code (to be given to the operator): TURM25524.

IHS Market Reports: Construction Costs End 2016 on a High Note

Continuing the recovery after a 22-month price slump

Construction costs rose for the second straight month, according to IHS Markit (Nasdaq: INFO) and the Procurement Executives Group (PEG). The headline current IHS PEG Engineering and Construction Cost Index registered 53.3, up from 50.7 in November, continuing the recovery after a 22-month slump in prices. Strength was evident in both labor and material markets.

The current materials/equipment price index came in at 53.3 in December after two months of falling prices. Six of twelve categories tracked in the materials sub-index showed rising prices, three had falling prices, and prices remained unchanged in three categories. Pumps and compressors registered falling prices once again; prices have been falling for this category for almost 17 months. Exchangers had a similar profile, with prices only reaching the neutral mark this month after falling for 16 months. Weakness in these two categories indicates the recent strength in raw materials has yet to filter uniformly into intermediate and final goods.

“Notwithstanding the stronger readings of the past two months in the materials/equipment index, upstream commodity prices look exposed at the moment and poised for a correction,” said John Mothersole, director of research at IHS Pricing and Purchasing. “While we do see leverage becoming more evenly balanced between buyers and suppliers in 2017, we expect upstream commodity markets to reset in the months immediately ahead with prices pulling back at least temporarily to better reflect underlying fundamentals.”

The current subcontractor labor index came in at 53.1 in December, slightly lower than the 54.1 November reading, but still presenting positive momentum. In the Northeast, Midwest and Southern United States, labor costs rose; in the West, costs remained the same as last month. Even areas affected by the downturn in energy markets are feeling the effects of a tightening labor market. In Canada, labor costs remained the same in both eastern and western regions.

The six-month headline expectations index recorded another month of increasing prices, with the index moving from 65.1 in November to a strong 68.9 in December. The materials/equipment index rose from 66.4 to 73.3, affirming widespread expectations of higher future prices. Every component showed rising prices; there were no expectations for softer materials prices. Sub-contractor labor price expectations came in at 58.7 in December, slightly lower than the November figure of 61.9. In the United States labor costs are expected to rise in every region. In Canada, labor costs are expected to remain the same.

In the survey comments, respondents have noted no supply shortages of materials. Proposal activity has registered an uptick in the recent months, and participants are showing increased optimism for 2017.

To learn more about the new IHS PEG Engineering and Construction Cost Index or to obtain the latest published insight, please click here.

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