Tag Archive for 'non-residential'

ABC Reports: Nonresidential Construction Hiring Surges

CEU2“The U.S. economy added an average of 289,000 jobs per month during the final three months of 2014, indicating that momentum is surging as we transition into 2015.”—ABC Chief Economist Anirban Basu.

Construction employment december 2014The U.S. construction industry added 48,000 jobs in December, including 22,800 jobs in nonresidential construction, according to the Bureau of Labor Statistics (BLS) preliminary estimate released Jan. 9. November’s estimate was unchanged in this release, remaining at 20,000 net new construction jobs, but nonresidential construction’s November jobs figure was upwardly revised to 7,100 jobs.

“The U.S. economy added an average of 289,000 jobs per month during the final three months of 2014, indicating that momentum is surging as we transition into 2015,” said Associated Builders and Contractors Chief Economist Anirban Basu. “This represents good news for the construction industry in 2015 and perhaps beyond, particularly with respect to office construction, retail construction, and other segments that benefit directly from accelerating job growth and decreasing unemployment. Overall, the economy has built steady momentum since the end of last winter adding an average of 246,000 jobs per month in 2014, an increase of more than 50,000 jobs added per month compared to 2013.”

According to the BLS household survey, the national unemployment rate fell to 5.6 percent in December. This represents the lowest level of unemployment since June 2008. The declining unemployment rate is most likely a result of a labor force that shrank by 273,000 persons in December, after expanding in the previous two months. The labor force participation rate fell by .02 percent and now sits at 62.7 percent.

“One of the most interesting aspects of the report is that construction unemployment ended the year at 8.3 percent on a non-seasonally adjusted basis,” said Basu. “While construction firm executives have been worried for years about the specter of construction skills shortages, the BLS data indicate there are plenty of people looking for jobs in construction. It is likely that many of these prospective workers lack the skills necessary to fill the openings construction firms are seeking to fill or live in areas where construction employment growth is much slower. Normally, high construction unemployment would imply slow rates of wage and compensation increases; however, ABC believes this is not the case. Because of the presence of skills mismatches, wage gains are likely to be sizeable in 2015 even in the presence of lofty rates of construction unemployment.”

Construction employment for the month and the past year breaks down as follows:

  • Nonresidential building construction employment expanded by 10,000 for the month and is up by 23,400 jobs, or 3.4 percent, since December 2013.
  • Residential building construction employment expanded by 800 jobs in December and is up by 44,500 jobs, or 7 percent, on an annual basis.
  • Nonresidential specialty trade contractors added 12,800 jobs for the month and employment in that category is up by 76,900 jobs, or 3.7 percent, from the same time one year ago.
  • Residential specialty trade contractors gained 12,700 jobs in December and have added 87,600 jobs, or 5.6 percent, since December 2013.
  • The heavy and civil engineering construction segment gained 11,600 jobs in December and job totals are up by 57,900, or 6.6 percent, on a year-over-year basis.

To view the previous employment report, click here.

ABC Reports: Nonresidential Fixed Investment Expands 5.5 Percent During Robust Second Quarter

CEU2“The robust second quarter growth was primarily driven by higher consumer and business spending, ” —ABC Chief Economist Anirban Basu.

GDP_Q2_2014Nonresidential fixed investment expanded 5.5 percent and residential fixed investment expanded 7.5 percent during the second quarter of 2014 according to a July 30 release by the Bureau of Economic Analysis. Overall, real gross domestic product (GDP) increased 4 percent (seasonally adjusted annual rate) during the second quarter of 2014 following a 2.1 percent decrease (revised from -2.9 percent) in the first quarter.

“The robust second quarter growth was primarily driven by higher consumer and business spending,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Today’s 4 percent reading on second quarter GDP blew away consensus expectations of 3 percent, and the first quarter wasn’t quite as bad as suspected either. Viewed collectively, the data indicate that the U.S. recovery should exhibit decent momentum through the balance of the current year and into 2015.

“Nonresidential fixed investment expanded even more briskly than the broader economy,” said Basu. “However, the rebound from the dismal first quarter was broad-based; federal government spending was the only segment that contracted during the second quarter.”

Estimates for 2013 were revised to 2.2 percent growth, up from 1.9 percent in previous estimates. However, the revisions also show that the economy grew at a slower pace from 2009 to 2012 than previously thought. “This recovery was already the weakest in U.S. history,” said Basu. “Since the recession ended in the second quarter of 2009, the economy has grown at an average annual rate of just 2.3 percent (revised down from 2.4 percent in previous estimates).

“Despite the slow and laborious recovery, there is reason for optimism,” said Basu. “Today’s announcement marks the nonresidential fixed income segment’s strongest quarter since the beginning of 2012. In light of this positive data, expect nonresidential employment growth and construction spending—both of which will be released on Friday—to continue to trend higher.”

The following segments expanded during the second quarter and/or contributed to GDP.

Personal consumption expenditures added 2.5 percent to GDP after contributing 1.2 percent in the first quarter.

Spending on goods grew 6.2 percent.

Real final sales of domestically produced output—minus changes in private inventories—increased 4.3 percent after a 0.4 percent increase in the first quarter.

National defense spending expanded 1.1 percent after falling 4.0 percent in the first quarter.

State and local government spending expanded 3.1 percent during the second quarter after falling 1.3 percent in the first quarter.

Two key segments did not experience quarterly growth.

Federal government spending fell 0.8 percent in the second quarter following a 0.1 percent decrease in the prior quarter.

Nondefense spending fell 3.7 percent after gaining 6.6 percent in the previous quarter.

To view the previous GDP report, click here.

ABC Reports:Nonresidential Construction Gains Jobs In January

CEU2“The hope is that the lull in employment expansion will end shortly as temperatures begin to rise.” —ABC Chief Economist Anirban Basu.

Spending_2 3The construction industry gained 48,000 jobs in January, according to the Feb. 7 employment report by the U.S. Department of Labor (DOL). Nonresidential construction gained 21,000 jobs, representing a significant rebound from the 14,100 jobs lost by the segment in December. Nonresidential construction accounted for 47.7 percent of January’s total construction industry job gain and 28.1 percent of the construction industry job gain in the past year.

The national construction unemployment rate expanded to 12.3 percent on a non-seasonally adjusted basis in January, compared with 11.4 percent in December. This was due to a combination of seasonal factors and may be impacted by the end of the government’s long-term unemployment benefits program, which may have induced people look for work in construction—an industry generally known to be in recovery.

“The fact of the matter is that we simply do not know with any conviction what is transpiring in the U.S. labor market,” said Associated Builders and Contractors Chief Economist Anirban Basu. “With respect to construction, January’s employment recovery is likely attributable in large measure to the fact that December construction employment was suppressed by weather. While January was also associated with bitter cold, large snowfalls and ice storms, the week during which the data was gathered last month represented a period of relative meteorological calm.”

According to the Bureau of Labor Statistics’ household survey, the national unemployment rate decreased a tenth of a percent in January to 6.6 percent. This represents the lowest unemployment rate since October 2008. The labor force participation rate increased from its historic low of 62.8 percent to 63 percent in January.

“Based on data regarding backlog, architectural billings and other leading indicators, the nonresidential construction outlook remains benign,” said Basu. “However, the last two months have not been good ones for job creation, according to this release. The hope is that the lull in employment expansion will end shortly as temperatures begin to rise.”

Nonresidential building construction employment expanded by 8,300 jobs for the month and is up by 21.9 jobs (3.3 percent) since January 2012.

Residential building construction employment rose by 13,200 jobs in January and is up by 52,200 jobs (8.8 percent) on an annual basis.

Nonresidential specialty trade contractors gained 12,900 jobs for the month and employment in that category is up by 28,400 jobs (1.4 percent) from the same time last year.

Residential specialty trade contractors gained 3,600 jobs in January and have added 69,200 jobs (4.6 percent) since January 2013.

The heavy and civil engineering construction segment gained 10,100 jobs in January and job totals are up by 6,800 (0.8 percent) on a year-over-year basis.

To view the previous Employment report, click here.

ABC: Private Nonresidential Construction Spending Continues To Climb In March

“The expectation is that privately financed construction volumes will continue to rebound gradually into the summer.” —ABC Chief Economist Anirban Basu.

Spending on private nonresidential construction increased 1.8 percent in March according to the May 2 report by the U.S. Census Bureau. While private nonresidential construction spending has been increasing for the past three months, it is still 10.2 percent lower from March 2010. Total nonresidential construction spending – which includes both privately and publicly financed construction – was $531.1 billion on a seasonally adjusted annual rate in March, up 0.9 percent from the previous month, but 6.1 percent lower than the same time last year.

(See Analysis below)

Ten of the sixteen nonresidential construction subsectors posted increases for the month including lodging, up 6.1 percent; manufacturing, 5.2 percent higher; health care, up 2.4 percent; power, up 1.8 percent; and office construction, 1.7 percent higher. Only four subsectors registered increases in spending compared to the same time last year with conservation and development 10.5 percent higher; highway and street up 4.9 percent; communication 4.7 percent higher; and power construction up 3.9 percent.

Of the six nonresidential construction subsectors posting decreases for the month, conservation and development was down 6 percent; communication was 2.5 percent lower; and water supply was down 1.9 percent. While posting significant increases for the month, several subsectors are lower compared to March 2010. They include lodging, down 31 percent; and manufacturing, down 28 percent. Other subsectors with decreases of more than 10 percent include religious, down 20.1 percent; public safety, down 17.6 percent; and office construction, down 13.7 percent.

Public nonresidential construction inched up 0.2 percent for the month, but was down 2.3 percent year-over-year. Residential construction spending increased 2.4 percent in March but is down 8 percent from the same time last year. Overall, total construction spending – which includes nonresidential and residential construction – grew 1.4 percent in March, but is 6.7 percent lower compared to the same time last year.

Analysis

“The transition from publicly financed activities to privately financed ones continues,” said Associated Builders and Contractors Chief Economist Anirban Basu. “In contrast to the trends of the past year, construction related to lodging, office and manufacturing was up in March, an indication that the economic recovery that began in mid-2009 is finally beginning to influence the nation’s nonresidential construction sector.

“Of course, skeptics are likely to point out that observed improvement in construction volumes between February and March may largely be a reflection of seasonal factors rather than economic ones,” said Basu. “It is true that February’s harsh winter conditions in much of the nation were not conducive to ongoing construction and that at least part of the monthly recovery is related purely to the weather.

“However, despite the recent uptick in privately financed construction, publicly financed construction continues to remain strong. One year ago, publicly financed construction represented 51.4 percent of total nonresidential construction spending. In March 2011, that proportion stood at 53.4 percent, slightly down from February’s corresponding statistic of 53.9 percent,” Basu said.

“It’s important to note that after recent declines in healthcare-related construction spending, healthcare construction was up in March and power-related construction expanded for two consecutive months. The expectation is that privately financed construction volumes will continue to rebound gradually into the summer even as certain publicly financed construction segments, such as public safety and education, will experience diminished spending,” said Basu.

Nonresidential Construction Spending Dips in December 2010

The question becomes whether the data indicate an end to a short period of recovery, or whether the recovery was temporarily halted by snow and cold temperatures.ABC Chief Economist Anirban Basu.

Blame it in part on the bad weather, total nonresidential construction spending – which includes both privately and publicly financed construction – dipped 1.6 percent in December 2010, and is down 6.4 percent from December 2009. This, according to the February 1 construction spending report by the U.S. Census Bureau: Total nonresidential construction spending totaled $552.2 billion in December on a seasonally adjusted annual rate. (See Analysis below)

Meanwhile, private nonresidential spending slipped 0.5 percent in December following three straight months of increases, and is down 12.3 percent from the same time one year ago.

Thirteen construction subsectors experienced monthly decreases in spending, including conservation and development, dropping 17.1 percent; religious, down 6.5 percent; and public safety-related construction, down 6.4 percent. Year-over-year, those construction subsectors posting the largest decreases include lodging, down 44.1 percent; office, down 25.7 percent; and manufacturing, down 24.6 percent.

Only three of the sixteen construction subsectors posted increases in December. They are power, up 2.1 percent; communication, up 1.6 percent; and transportation, up 0.7 percent. Six subsectors finished the year higher in terms of construction spending including power, up 13 percent; highway and street, up 7.6 percent; and amusement and recreation, up 4.4 percent.

Public nonresidential construction fell for a second consecutive month, down 2.6 percent in December and 0.5 percent year-over-year. Residential construction spending fell 4.4 percent for the month and 6.3 percent from the same period one year ago. Total construction spending – which includes both residential and nonresidential – dropped for the third straight month, down 2.5 percent in December 2010 and down 6.4 percent from December 2009.

Analysis

“Without a doubt, the nation’s weather played a role in shaping the December construction spending data,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Prior to December, private nonresidential construction spending was rising in America. However, the question becomes whether the data indicate an end to a short period of recovery, or whether the recovery was temporarily halted by snow and cold temperatures.

“There is evidence to suggest that the impact of federal stimulus spending is steadily exiting the construction spending data. For instance, the largest monthly decline among the sixteen nonresidential construction sectors was in conservation and development, a segment closely related to federal spending and investment,” said Basu.

“Public safety-related spending also declined sharply in December, which may reflect sharp cuts in state and local government spending. In other words, the outlook for publicly financed construction is dimming and the December data fit neatly with that outlook,” Basu said.

“The construction segment with arguably the brightest outlook going forward is power. With oil prices above $90 a barrel, there is reason to believe that power will be a bright spot for nonresidential construction spending this decade,” said Basu. “In addition, there remains a large amount of deferred maintenance to be completed within the nation’s power industry, which suggests that 2011 construction spending in that economic segment will expand.”