Tag Archive for 'economy'

Wells Fargo Reports: Housing Starts Plunge Unexpectedly in September

e3aadcc2-c3c9-49d6-8b85-87e4ca28edd5_wfs_logo_20_gradientFollowing a sharp decline in August, housing starts fell to its lowest level since early-2015 in September. The decline was concentrated in multifamily, while single-family rebounded. Permits jumped 6.3 percent.

Headline Starts Falter, but Permits Point to Gains

  • Consensus estimates projected a partial reversal in housing starts in September following a sharp decline in August. That said, housing starts tumbled 9.0 percent in September to a 1.047 million-unit rate. However, all of the weakness was concentrated in multifamily, which fell 38.0 percent during the month, while single-family rose 8.1 percent. Strength in purchase applications and permits suggest continued gains.

Builder Sentiment Still on Track

  • Housing permits, which typically lead housing starts and are far less volatile, rose a solid 6.3 percent. With the level of permits running ahead of starts, we expect starts to pick up in the coming months. Although builder confidence retreated in October, the trend still suggests upward momentum in single-family construction. The NAHB/Wells Fargo homebuilders’ survey rose to 62.3 on a three-month moving average basis.

Housing Starts Tumble Unexpectedly in September Housing Starts Tumble Unexpectedly in September Housing Starts Tumble Unexpectedly in September Housing Starts Tumble Unexpectedly in September

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

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Wells Fargo Reports: Dodge Momentum Index Tumbles in September

Wells_Fargo_Securities_logoThe Dodge Momentum Index slipped 4.3 percent in September, from an upwardly-revised August reading. By sector, weakness was broad-based with commercial and institutional declining on the month.

Nonresidential Planning Trend Remains Favorable

The Dodge Momentum Index fell 4.3 percent in September to 129.0; this reading comes on the heels of five sequential months of gains. Despite the volatility, the index is trending higher and is up 5.1 percent year over year. According to Dodge Data & Analytics, the favorable trend in planning activity suggests that developers are moving forward notwithstanding political and economic headwinds, which bodes well for nonresidential construction spending.

Broad-Based Softness by Sector

Commercial and institutional planning declined in September, down 3.6 percent and 5.3 percent, respectively. The weak monthly reading is likely payback from the influx of large projects in August. On a year-ago basis, commercial and institutional are up about 5 percent, but the pace marks a deceleration from double-digit gains posted in recent months. Five notable projects with a value over $100 million entered the planning stage in September, which is down from 14 in August.

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From: I Maker America –Manufacturing Day is THIS Friday

unknownDear Supporter –

Manufacturing Day is THIS Friday, and the election is only 35 days from today! That’s why we’re asking you to Stand up for Manufacturing and help make a difference on November 8.

Before you vote, click here to get the facts on the manufacturing issues that matter in your state.

From rebuilding our infrastructure to supporting America’s farmers, your vote matters.

Help us spread that message by checking out and sharing these videos on the issues that matter to manufacturers during the campaign season.

Every bit of effort counts! We hope you’ll help us stand up for manufacturing, and help to Make America this election season!


The I Make America Team

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


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.”