Tag Archive for 'private sector'

ABC Reports : Nonresidential Construction Down in March, Says ABC Private Sector Falters, Public Sector Unchanged

Nonresidential construction spending declined 0.3 percent in March, according to an Associated Builders and Contractors (ABC) analysis of U.S. Census Bureau data released today. Nonresidential spending, which totaled $740.9 billion on a seasonally adjusted, annualized basis, has expanded 2.5 percent on a year-over-year basis. February’s spending estimate was revised roughly $10 billion higher, from $732.8 billion to $742.8 billion, rendering the March decline less meaningful.

Private sector nonresidential construction spending fell 0.4 percent on a monthly basis but rose 2.2 percent from a year ago. Public sector nonresidential spending remained unchanged in March, but it is up 2.9 percent year-over-year.

“The nonresidential construction spending data emerging from the Census Bureau continue to be a bit at odds with other data characterizing growth in the level of activity,” said ABC’s Chief Economist Anirban Basu. “For instance, first quarter GDP data indicated brisk expansion in nonresidential investment. Data from ABC’s Construction Backlog Indicator, the Architecture Billings Index and other leading industry indicators have also been suggesting ongoing growth. Despite that, private nonresidential construction spending is up by roughly the inflation rate, indicating that the volume of services delivered over the past year has not expanded in real terms.

“That said, most economists who follow the industry presumed that March data would be somewhat soft,” said Basu. “The Northeast and Midwest were impacted by unusually persistent storm activity in March. The same phenomenon impacted March’s employment estimates, which indicated that construction actually lost 15,000 jobs that month. Other weather-sensitive industries, including retail trade, also experienced slow to negative job growth in March.

“The upshot is that CEOs and other construction leaders should remain upbeat regarding near-term prospects despite today’s construction spending report,” said Basu. “Leading indicators, including a host of confidence measures, collectively suggest that business investment will be on the rise during the months ahead. Improved state and local government finances should also support additional nonresidential construction activity.

“At the same time, construction industry leaders must remain wary of a sea of emerging risks to the ongoing economic and construction industry expansions,” said Basu. “Interest rates are on the rise. Materials prices, including those associated with softwood lumber, steel, and aluminum, are expanding briskly. Wage pressures continue to build. There are also issues related to America’s expanding national debt, increasingly volatile financial markets, the geopolitical uncertainty that has helped to propel fuel prices higher, and lack of transparency regarding America’s infrastructure investment intentions. The challenge for construction CEOs and others, therefore, is to prepare for growing activity in the near-term, but for something potentially rather different two to three years from now.”

AGC Reports: Construction Sector Adds 16,000 Jobs In June Following Three-Month Lull As Industry Unemployment Rate Drops To Lowest Level In Series History

Contractors Struggle to Fill Jobs despite Hourly Earnings 10 Percent Higher than Private-Sector Average;  Association Officials Call for Measures to Make it Easier to Set Up Construction Training Programs

Construction employment increased by 16,000 jobs in June to the highest level since October 2008, signaling a new burst of hiring after three months of pause, according to an analysis of new government data by the Associated General Contractors of America. Association officials urged federal, state and local lawmakers to enact measures to make it easier for school officials, local associations and construction firms to set up construction training programs.

“Construction firms added employees over the past year at nearly double the rate of the overall economy, but the record-low unemployment rate for construction workers shows companies are having to reach outside the industry to fill positions,” said Ken Simonson, the association’s chief economist. “Finding any qualified workers will likely become even harder with low unemployment throughout the economy.”

Construction employment totaled 6,896,000 in June, a gain for the month of 16,000—nearly double the 9,000 jobs added in the previous three months combined, the economist noted. The June level constituted an increase of 206,000, or 3.1 percent, from a year ago. The year-over-year growth rate was almost double the 1.6 percent rise in total nonfarm payroll employment. The sector’s unemployment rate in June virtually matched the rate for all workers at 4.5 percent, the lowest June level for construction since the series began in 2000.

Average hourly earnings in the industry climbed to $28.82, an increase of 2.5 percent from a year earlier.  The economist noted that construction pays nearly 10 percent more per hour than the average nonfarm private sector job in the United States, which pays $26.25 on average per hour.

Residential construction—comprising residential building and specialty trade contractors—added 6,000 jobs in June and 115,600, or 4.5 percent, over the past 12 months. Nonresidential construction (building, specialty trades, and heavy and civil engineering construction) employment increased by 10,300 jobs in June and 90,600, or 2.2 percent, over 12 months.

Construction officials cautioned that construction employment gains would likely have been higher if it were easier for firms to find workers to hire. Instead, firms are asking current employees to work longer hours to keep pace with demand. They urged lawmakers at all levels to enact measures that give educators and employers greater flexibility to set up and run construction training programs. In particular, they called on Senators to enact a new Perkins Act measure that passed in the House last month. 

“More young people would be able to find jobs in construction that pay better than other industries if there were more opportunities to expose students to the sector,” said Stephen E. Sandherr, the association’s chief executive officer. “It is time to fix an education system that is preparing too many students for jobs that don’t exist while too many jobs go unfilled because graduates lack the skills employers need.”AGC Reports: 

3rd Quarter 2011 GDP: Nonresidential Fixed Investment Up 16.3 Percent

“What the United States is now experiencing is acceleration in capital formation.” —ABC Chief Economist Anirban Basu.

Putting fears of a looming recession at rest for now, nonresidential fixed investment jumped 16.3 percent in the third quarter of 2011 following a revised 9.2 percent increase in the previous quarter of this year, according to the October 27 Gross Domestic Report (GDP) report by the Department of Commerce. Nonresidential fixed investment in structures increased for the second straight quarter this year, up 13.3 percent in the third quarter following a 22.6 percent increase in the second quarter. Fixed investment in equipment and software expanded 17.4 percent last quarter following a 6.2 percent increase in the second quarter.

Residential fixed investment grew 2.4 percent in the third quarter after a 4.2 percent loss in the second quarter. Exports grew 4 percent in the third quarter as exports of goods were up 4.7 percent and exports of services increased by 2.4 percent. Imports were up 1.9 percent for the quarter as imports of goods increased by 1.8 percent and imports of services increased 2.4 percent.

Personal consumption expenditures increased 2.4 percent in the third quarter as expenditures of services were up 3.2 percent and expenditures in goods increased 1.4 percent. Changes in real private inventories subtracted 1.1 percent to the third-quarter change in real GDP. Private businesses increased inventories by $5.4 billion for the quarter. Real final sales of domestic product – GDP less change in private inventories – increased 3.2 percent for the quarter following a 1.3 percent increase in the second quarter.

Federal government spending increased 2 percent in the third quarter as national defense spending rose 4.8 percent and nondefense spending decreased 3.7 percent. State and local governments decreased spending for the fifth consecutive quarter, down by 1.3 percent in the third quarter.

Gross domestic purchases – purchases by U.S. residents of goods and services wherever produced – increased 2.2 percent in the third quarter following a 1 percent increase in the second quarter. Overall, real gross domestic product (GDP) increased 2.5 percent in the third quarter following a revised 1.3 percent increase in the second quarter.

Analysis

“Today’s third quarter GDP report puts any talk of an imminent recession to rest for now,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Indeed, economic data released over the past month have been surprisingly good.

“Today’s report shows that a growing share of American corporations are willing to spend money to spur top-line and bottom-line expansion,” Basu said. “However, this does not signify that the nonresidential construction industry is set to boom.

“Public sector support for construction services is likely to be flat at best, and job growth remains halted and lending disciplined,” said Basu. “But the overall economic outlook for the nonresidential construction industry has improved materially over the past several weeks.

“Eventually, the investment in equipment software and structures will trend late into expanded hiring. Capital and labor go together and what the United States is now experiencing is acceleration in capital formation,” said Basu.

“That, in turn, will help trigger more demand for construction services, whether in the form of office buildings, apartments, or shopping centers. In short, the improved outlook for the broader economy in 2012 signals more recovery for construction activities in 2013 than were contemplated just a few weeks earlier,” Basu said.