Tag Archive for 'highways'

ABC Reports: Construction Job Growth Accelerates Amid Optimistic Post-Election Outlook in November

1291931467352794367The U.S. construction industry added 19,000 net new jobs in November and has now added jobs for three consecutive months, according to analysis of U.S. Bureau of Labor Statistics data released today by Associated Builders and Contractors (ABC).

Industry employment is up by 2.4 percent on a year-over-year basis, considerably faster than the overall economy’s 1.6 percent job growth rate. Construction industry employment growth would likely be much sharper if more suitably skilled or trainable workers were available to fill available job openings. The skilled labor shortage appears to be impacting nonresidential activity more than residential. The nonresidential sector added 1,100 net new jobs in November, while the residential sector added 19,600 positions. Heavy and civil engineering lost 2,100 jobs for the month.

“The demand for construction talent was strong before the election, and the outcome has improved the near-term outlook for private and public construction activity,” said ABC Chief Economist Anirban Basu. “The implication is that demand for construction workers is positioned to remain high, which will translate into gradual reduction in industry unemployment and significant wage pressures.

“Some of these wage pressures are already evident,” said Basu. “Construction firms in the nation’s hottest markets, including New York, Seattle and Miami, report that in certain occupational categories, compensation is rising at a 10 percent per annum pace or more. This appears to be particularly true for construction superintendents and managers.

“Next year is shaping up to be a good one for both residential and nonresidential construction segments,” said Basu. “Of the two branches of the industry, nonresidential likely offers the larger upside. An infrastructure-led stimulus package would largely be oriented around nonresidential activities. Moreover, in certain markets, there is evidence that the apartment market is approaching saturation. Expected increases in interest rates next year would also tend to hit certain residential activities (i.e., single-family construction) more forcefully.”

The construction unemployment rate remained unchanged at 5.7 percent in November. One might have expected that this rate would have declined given the generally elevated levels of demand for construction talent. However, there are certain parts of the country that are softer economically, including many commodity-rich communities that have been impacted by lower oil and natural gas prices. Moreover, it is difficult to assess the skill level of jobseekers.

The unemployment rate for all U.S. industries fell to 4.6 percent, the lowest rate since mid-2007 and 0.3 percentage points below October’s rate. The labor force lost 226,000 persons for the month, but is still more than 2 million people larger than at the same time one year ago.

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Wells Fargo Reports: Construction Spending Bounces Back in October

Wells_Fargo_Securities_logoFollowing a surge in the third quarter in private nonresidential construction, the pace of spending slowed to start Q4. Spending on residential construction showed some signs of strengthening in the fourth quarter.

Public Construction Picks Up

  • Total construction spending rose 0.5 percent to begin the fourth quarter with residential investment rising 1.8 percent, while nonresidential construction declined 0.3 percent for the month.
  • Private construction spending contracted for the second straight month, while public construction activity rose 2.8 percent with additional upward revisions to prior months’ data.

Better Residential Investment in Q4

  • Private residential construction rose 1.6 percent with single and multifamily both posting 2.8 percent increases, while home improvement fell 0.6 percent for the month. The bounce back in private residential supports our view for a rebound in residential investment in Q4.
  • A rise in both federal and state & local construction are supportive of greater government investment in Q4.

Construction Spending Softens Further in September

 

 

 

 

 

Construction Spending Softens Further in September

Construction Spending Softens Further in September

ABC Reports:Nonresidential Construction Spending Gains Momentum

1291931467352794367Nonresidential construction spending totaled $699.7 billion on a seasonally adjusted, annualized basis in October, a 0.3 percent decrease from September’s significantly upwardly revised total, but an increase of 2.6 percent year-over-year according to analysis of U.S. Census Bureau data released today by Associated Builders and Contractors (ABC).

September’s nonresidential spending estimate was revised from $690.5 billion to $701.7 billion, a 1.6 percent increase. August’s estimate received a similar revision, increasing from $696.6 billion to $703.6 billion. Nonresidential spending is now 2.6 percent higher than at the same time one year ago.

“While the construction spending data remain challenging to interpret, the general story is still positive overall,” said ABC Chief Economist Anirban Basu. “Nonresidential construction spending is up by nearly 3 percent on a year-over-year basis. Certain segments are red hot, including the office and lodging segments, both of which have experienced more than 20 percent spending growth over the past 12 months. Investors, both domestic and global, continue to search for deals during a period of low global interest rates. Commercial real estate has emerged as one of the favorite destinations for investor capital, helping to raise property values and prompt significant numbers of construction starts.

“While certain private segments flourish, publically financed categories continue to languish,” said Basu. “This is particularly true in the public safety, conservation and development and sewage and waste disposal categories, all of which have seen year-over-year spending declines of 6.5 percent or more. The outcome of the election has lifted expectations for spending in many publically financed categories. Both major presidential candidates had discussed investing in infrastructure during their campaign. However, there was a conventional wisdom suggesting that divided government would be the most likely outcome, which would likely have translated into more stalemates and less infrastructure spending. With one party now controlling the U.S. Senate, U.S. House of Representatives and the White House, a meaningful infrastructure package may be more likely. While that will not affect spending numbers in the immediate near term, the longer-term outlook for infrastructure spending has brightened considerably since our previous report.

“In addition to the promise of augmented infrastructure spending, there are indications of corporate and personal tax cuts to come, increased defense spending, deregulation of the financial system, and lighter regulation of energy producers,” said Basu. “All of these policy shifts are consistent with greater construction spending going forward, at least for the foreseeable future. In other words, the 2017-18 nonresidential spending outlook has improved over the last several weeks. It remains to be seen how much the president-elect can accomplish over the next few months, and what affect that will have on the nonresidential construction segment of the U.S. economy.”

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Wells Fargo Reports: Infrastructure Spending and the Fiscal Multiplier

Wells_Fargo_Securities_logoInfrastructure spending is widely known to boost economic activity. However, the fiscal multiplier tends to be much larger during recessions, suggesting the late-cycle lift could be less than originally anticipated.

Infrastructure Fiscal Multiplier Low During Expansions

President-elect Donald Trump has proposed an infrastructure program of $1 trillion over the next 10 years (the Trump transition website notes $550 billion.) The American Society of Civil Indicator Title Engineers (ASCE) reports that the nation’s infrastructure is in “poor” condition and would require an estimated $3.6 trillion by 2020 to maintain a state of “good” repair, with only about half the needed funds committed (top chart).

Although details of the infrastructure program have yet to be published, two of Trump’s advisers provided a proposal in October (Ross, Wilbur and Navarro, Peter, “Trump Versus Clinton on Infrastructure,” Oct. 27, 2016). The plan includes $167 billion in equity investment, which is almost 17 percent of the total package. The equity portion would be supported by a tax credit equal to 82 percent of the equity. The remainder of the plan would be financed by debt. Based on the structure, critics of the plan suggest that investors will have little “skin in the game.” There is also recent talk about an infrastructure bank, which was included in the

While we await the details, discussion has also been centered on the impact to overall economic growth. Academic research finds that infrastructure spending, especially highway funding, has a positive effect on real GDP growth, which can be seen in the first two years and then a larger second- round effect after six to eight years (Leduc and Wilson, 2012). In fact, based on Congressional Budget Office (CBO) estimates, the multiplier for infrastructure spending for the American Recovery Indicator Titleand Reinvestment Act was larger than most other forms of government spending (middle chart). Literature also highlights the correlation between infrastructure spending and productivity growth in the U.S. and suggests that periods of weak public investment explains a good portion of the slow productivity growth (Aschauer, 1988) (bottom chart). These anticipated results are very promising, especially given slow productivity growth and low growth in potential output. However, the direct effect of infrastructure spending will be subject to long lags and will depend on the size of the fiscal multiplier.

A fiscal multiplier is the ratio of how much economic activity will increase for a unit of government spending. Studies show a wide array of multipliers based on a host of factors, with values ranging from 0.5 to 3.5 (Whalen and Reichling, 2015). The multiplier can also vary over the cycle. Research estimates a peak multiplier of 2.5 during recessions and 0.6 in expansions, with the gap due to stimulus crowding out private spending during multiplier for infrastructure spending is slightly less than two over a 10 year period (Leduc and Wilson, 2012), suggesting a $1.00 increase in spending raises output by roughly $2.00. That said, the infrastructure multiplier may be smaller during an expansion.

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

1 Auerbach, Alan and Gorodnichenko, Yuriy. 2012a. “Measuring the Output Responses to Fiscal Policy.” American Economic JournalIndicator Title

ARTBA Foundation Announces 2016Transportation Development Hall of Fame Honorees

36c7fbed-30d0-432b-8904-e2b650dedefdThe 34th President of the United States, one of the “fathers” of the Interstate Highway System, and the iconic founders of Caterpillar Inc., have been selected into the 2016 American Road & Transportation Builders Association (ARTBA) Foundation’s “Hall of Fame.”

Launched in 2010, the “Transportation Development Hall of Fame” honors individuals or families from the public and private sectors who have made extraordinary contributions to U.S. transportation development during their careers. A committee of judges comprised of construction industry journalists annually reviews nominees in two categories:

Transportation Design & Construction Industry Innovators: Honors the men and women who discovered or created a “game changing” product or process that significantly advanced transportation design, construction and/or safety. It seeks to honor the original innovator.
     Benjamin Leroy Holt & Clarence Leo “C.L.” Best

Transportation Design & Construction Industry Leaders (Individuals or Families): Recognizes men, women and families who have made significant contributions—beyond just having successful businesses or careers—that have notably helped advance the interests and image of the transportation design, construction and safety industry.

President Dwight D. Eisenhower
 Francis C. Turner

Innovators:

Benjamin Leroy Holt (1849-1920) & Clarence Leo “C.L.” Best (1878-1951)

Benjamin Leroy Holt built his first combined harvester in Stockton, California, in 1886, using flexible chain belts rather than gears to transmit power from the ground wheels to the working mechanism, thus reducing breakage and down time. He built his first steam traction engine tractor in 1890, which could burn wood, coal or oil as fuel and carry 675 gallons of water. Holt incorporated the Holt Manufacturing Company with his brothers in 1892.

Meanwhile, Clarence Leo “C.L.” Best began his career in 1891, at the age of 13, working for his father Daniel Best. Best established the C.L. Best Gas Traction Co. in 1910, the same year Holt Manufacturing registered “Caterpillar” as a trademark. The two companies merged to form the Caterpillar Tractor Co., in 1925. Its first product line consisted of five tractors. In 1936, the company’s track-type tractors helped complete the construction of the Hoover Dam, and one year later Caterpillar machines helped complete the Golden Gate Bridge. Best was chairman of the board of Caterpillar Tractor Company from its founding until his death in 1951.

Whether supporting Allied Troops during World Wars I and II, widening the Panama Canal or helping to construct the Three Gorges Dam in China, “Caterpillar Yellow” machines are known as the standard for the industry. The company, whose current product line consists of more than 300 machines, helped transform the way both the private and public sector transportation construction market completes projects.

Leaders:

     President Dwight D. Eisenhower (1890-1969)

His views about the need for a network of Interstate highways were shaped by a 62-day, 3,000-mile cross country trek over dirt, mud and sand roads in 1919 as a young army officer, and also by seeing first-hand the efficiency and strategic value of Germany’s Autobahn during World War II.

Later, as president, Dwight David Eisenhower worked doggedly to build a similar superhighway in the U.S., not only for military transport and evacuation of cities, but also to help reduce road fatalities and connect communities.

On June 29, 1956, President Eisenhower signed the law authorizing construction of the Interstate Highway System and creating the Highway Trust Fund to pay for it. It was the most notable domestic achievement of his presidency, and has been called one of the greatest achievements of the federal government during the second half of the 20th century.

The 47,000-mile road network became the thread that connects the fabric of America. Today, it continues to serve as the lifeblood of the U.S. economy, and provides an unprecedented level of mobility and safety for all Americans.

     Francis C. Turner (1908-1999)

In 1994, American Heritage magazine named him one of 10 people who, although unknown to the general public, had changed life for all in America. Others called him one of the “fathers” of the U.S. Interstate Highway System.

Much of his 50-year career in public service focused on big projects and big ideas, and his work produced big results.

Frank Turner first joined the federal Bureau of Public Roads in 1929. In 1943, he was chosen to expedite completion of the Alaska Highway. In 1950, he was named coordinator of the Inter-American highway and projects in other countries.

When President Eisenhower appointed the Clay Committee to plan the Interstates, Turner became the body’s executive secretary. He helped lead the committee’s work and was the liaison between the Bureau and Congress as it wrote the 1956 law authorizing the Interstate system.

With Interstate construction underway, Turner worked from 1957-69 as deputy commissioner of public roads, chief engineer and director of public roads to resolve disputes and keep the program moving forward. In 1969, he was appointed Federal Highway Administrator, the only holder of that position to come up through the ranks. He held the post until his retirement in June 1972.

For more than 30 years, the ARTBA Foundation, a 501(c)(3) tax-exempt entity, has supported an array of initiatives to “promote research, education and public awareness.” Its efforts include educational scholarships, awards, executive education seminars, roadway work zone safety and training programs, special economic reports and a national exhibition on transportation at the Smithsonian’s National Museum of American History.