Tag Archive for 'residential construction'

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ABC Reports: Construction Activity Increases as Backlog Edges Higher

Untitled-2Associated Builders and Contractors’ (ABC) Construction Backlog Indicator (CBI) expanded by 1 percent to 8.5 months during the 2nd quarter of 2015. Backlog declined 3 percent during the 1st quarter, which was punctuated by harsh winter weather and the lingering effects of the West Coast ports slowdown. CBI stands roughly where it did a year ago, indicative of an ongoing recovery in the nation’s nonresidential construction industry.

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“The nation’s nonresidential construction industry is now one of America’s leading engines of growth,” said ABC Chief Economist Anirban Basu. “The broader U.S. economic recovery is now in its 74th month, but remains under-diversified, led primarily by a combination of consumer spending growth as well as residential and nonresidential construction recovery. Were the overall economy in better shape, the performance of nonresidential construction would not be as closely watched. The economic recovery remains fragile despite a solid GDP growth figure for the second quarter, and must at some point negotiate an interest-rate tightening cycle. Recent stock market volatility has served to remind all stakeholders how delicate the economic recovery continues to be.

“Though CBI expanded during the second quarter, performance continues to be uneven,” Basu said.  “A surge in heavy-industrial investment in the Middle States, including in the auto sector, and technology-led growth in the West were responsible for the bulk of second-quarter momentum. Backlog actually slipped in the infrastructure category, which remains hamstrung by uncertainties lingering around the Highway Trust Fund. Backlog was not statistically significantly different in the South between the first and second quarters.

“The national outlook continues to be positive,” said Basu. “The most consistently upbeat information regarding U.S. economic performance continues to emerge from the labor market. The nation added more than 2.9 million jobs between July 2014 and July 2015, enough to help drive down office and other commercial vacancy rates in many major markets despite ongoing construction.

“Also consider the tendency for commercial construction to follow residential construction. To the extent that remains true, the recent uptick in residential starts should translate into more commercial starts going forward. All of this should set the stage for further rebounds in CBI during the quarters to come, even in the absence of a long-term policy regarding infrastructure investment in the U.S.”

For additional analysis click here.

Regional Highlights

  • The West experienced a significant expansion in backlog, rising 1.2 months following the resolution of the West Coast port slowdown, however backlog in the region remains nearly 2.5 months below its year-ago levels, the largest drop of any region.
  • Backlog in the South has essentially returned to where it was two years ago, in part because of a slowdown in energy-related investment. The implication is that the average contractor remains busy, but boom-like conditions no longer prevail in energy-intensive communities.
  • Despite this, backlog in the South continue to hold the longest average construction backlog.
  • Backlog slipped for a second consecutive quarter in the Northeast, but remains above levels registered during the second half of 2013.

 

Year-Over-Year CBI Map of Regions and Backlog Months
Second Quarter 2014 v. Second Quarter 2015Untitled-3

See Charts and Graphs

Highlights by Company Size

  • On a quarterly basis, backlog rose or remained flat across all firm sizes.
  • Average construction backlog is higher or roughly the same as year-ago levels for firms of all size categories with the exception of a half-month drop in backlog among firms generating $100 million or more in annual revenues.
  • TThe largest firms, however, continue to have the lengthiest average backlog at 10.7 months.

See Charts and Graphs

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To read more about the latest CBI, click  here

ABC Reports: Nonresidential Construction Employment Downtick No Cause for Concern

CEU2“Today’s employment numbers are consistent with the notion that the U.S. economy and the construction sector remain in recovery.”—ABC Chief Economist Anirban Basu.

Employment 9.4Nonresidential construction employment fell by 700 jobs in August after losing 5,600 jobs in July and 800 jobs in June. Despite the recent slide, nonresidential construction employment is still up 38,800 jobs for the year.

Total U.S. construction industry employment inched higher again in August, expanding by a modest 3,000 net new jobs from July, an increase of less than 0.1 percent. Residential construction and the heavy and civil engineering segment added 2,400 and 1,500 net new jobs in August, respectively.

“The recent slide in nonresidential construction employment is likely an aberration caused by seasonal adjustments,” said Anirban Basu, Associated Builders and Contractors’ chief economist. “The first estimate of August employment tends to be low across all industries, and next month’s revisions may well show job growth in nonresidential construction. It’s also true that the construction industry tends to lag the broader economy. Considering that August was the 66th consecutive month of private-sector job growth—the longest streak ever—there’s plenty of reason for optimism about the construction industry’s economic health.

“The nationwide unemployment rate fell for all the right reasons,” said Basu. “There were 1.5 million fewer unemployed persons in August than July and nearly 200,000 more employed persons. Even the employment-to-population ratio rose, if only by 0.1 percentage points. The upward trend in the construction unemployment rate also represents a positive change. A higher—though still historically low—unemployment rate is not necessarily bad news for an industry plagued by skilled labor shortages.

“We are in the mid-cycle stage of the recovery, which is frequently the lengthiest stage of the business cycle,” said Basu. “This phase is associated with solid job growth, low and/or falling unemployment, respectable GDP growth, and significant construction volume. It is also associated with rising interest rates. Today’s employment numbers are consistent with the notion that the U.S. economy and the construction sector remain in recovery.”

The construction unemployment rate added 0.6 percentage points in August and now stands at 6.1 percent. This is a sizable increase from July’s eight-year low, though it’s not necessarily a bad sign for an industry that has been plagued by labor shortages. The unemployment rate across all industries shed 0.2 percentage points, reaching a seven-year low of 5.1 percent.

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

  • Nonresidential building construction employment fell by 1,600 jobs for the month but is up by 15,500 jobs or 2.2 percent since August 2014.
  • Residential building construction employment expanded by 200 jobs in August and is up by 27,000 jobs or 4 percent on a year-over-year basis.
  • Nonresidential specialty trade contractors added 900 jobs for the month and employment in that classification is up by 60,000 jobs or 2.7 percent from the same time a year ago.
  • Residential specialty trade contractors added 2,200 net new jobs in August and have added 84,000 jobs or 5 percent since August 2014.
  • The heavy and civil engineering construction segment added 1,500 jobs in August and employment is up by 32,800 positions or 3.6 percent on a year-over-year basis.

To view the previous employment report, click here.

ABC REPORTS: Nonresidential Construction Employment Ticks up Despite Dismal Overall Jobs Report

CEU2“Today’s jobs report was a stunner and construction was not spared as the sector lost jobs for the first time in 15 months.” —ABC Chief Economist Anirban Basu.

Employment_4.3.15Nonresidential construction added 5,000 net new jobs in March, with nonresidential specialty trade contractors leading the way by contributing 4,400 new jobs, according to the April 3 Bureau of Labor Statistics preliminary estimate. As a whole, the U.S. construction industry lost 1,000 jobs in March, while February’s construction employment estimate (29,000 new jobs) was unrevised. The residential sector also regressed in March, losing 2,800 jobs.

“Today’s jobs report was a stunner and construction was not spared as the sector lost jobs for the first time in 15 months,” said ABC Chief Economist Anirban Basu. “Coming into the week, the consensus estimate for March’s net new job creation was in the range of 250,000. An ADP report released earlier in the week indicated that the U.S. private sector only added 189,000 jobs, which brought the consensus estimate closer to 200,000, however the initial Bureau of Labor Statistics’ estimate for March fell well short of even that diminished expectation.

“The knee-jerk reaction is to blame the weather,” said Basu. “While that seems natural, the fact of the matter is that the latest employment release comes on top of a sea of other data indicating that the U.S. economy has been losing momentum since the third quarter of last year and retail sales and manufacturing-related data have been among the sources of disappointment.

“Weather serves as a potential partial explanation, but another possibility is that some of the slowdown in job growth is attributable to reduced activity in the nation’s energy sector,” said Basu. “While lower fuel prices are helping to support various forms of activity, the impact on oil producers has been jarring. Those operating in the oil exploration and production segments of the economy have come to dominate layoff announcements recently. It may be that the negative impacts of lower energy prices are felt more intensely in the short-term, but that the positive effects will become obvious later this year.”

The national unemployment rate remained unchanged at 5.5 percent in March, though this is not necessarily a good thing. The labor force lost 96,000 workers in March after losing 178,000 in February. The labor force participation rate currently sits at 62.7 percent, equaling its lowest level since 1977. The construction unemployment rate fell to 9.5 percent in March, a 1.1 percent decrease from March. The falling construction unemployment rate is not something to celebrate, though; this too is a direct reflection of a shrinking labor force.

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

  • Nonresidential building construction employment expanded by 5,700 net new jobs for the month and is up by 31,600 jobs (4.6 percent) since February 2014.
  • Residential building construction employment shrank by 500 jobs in February, but is still up by 45,300 jobs (7 percent) on an annual basis.
  • Nonresidential specialty trade contractors added 10,000 jobs for the month and employment in that category is up by 86,100 jobs (4 percent) from the same time one year ago.
  • Residential specialty trade contractors added 17,200 net new jobs in February and 122,500 total jobs (7.5 percent) since February 2014.
  • The heavy and civil engineering construction segment shed 3,700 jobs in February, but employment is by 35,700 positions (4 percent) on a year-over-year basis

To view the previous employment report, click here

Wells Fargo Reports: Pending Home Sales Rise in November

Wells_Fargo_Securities_logoThe pending home sales index rose 0.8 percent in November to 104.8, which is slightly above its average for the past six months. Pending sales rose in the South, Northeast and West but fell slightly in the Midwest.

Stronger Pending Home Sales

 Pending home sales rose solidly in November, with the overall index rising 0.8 percent to 104.8. The pending home sales index has bounced around in recent months and has averaged 104.5 over the past six months.

 Any reading above 100 is a generally positive sign for existing home sales, which tend to lead pending home sales by about two months.

Sales Have Picked Up in the South

 Pending home sales rose 1.4 percent in the Northeast, 1.3 percent in the South and 0.4 percent in the West. Pending sales fell 0.4 percent in the Midwest, continuing a long string of declines.

 On a year-to-year basis sales are up the most in the South, where they have risen 3.7 percent. The Northeast and West are up 2.8 and 2.3 percent, respectively; while pending sales in the Midwest have fallen 3.3 percent over the past year.

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Wells Fargo Reports: New Home Sales Unexpectedly Eke Out a Modest Gain

Wells_Fargo_Securities_logo Following August’s outsized gain, new home sales rose a modest 0.2 percent in September to a 467,000-unit pace. However, sales in the previous three months were downwardly revised. Inventories remain low. New Home Sales Post Upside Surprise

 New home sales rose 0.2 percent in September, marking the second-straight monthly gain. Although the level is largely unchanged over the past two months, downward revisions to data in the previous three months dampens the excitement over the upward surprise. In fact, July data was revised from an increase to a decline of 1.2 percent. Revisions on a regional basis show much of the pullback was in the West and South.

Mixed Messages in New Home Sales Activity

 Median and average prices for a new home dropped during the month. Over the past year, the median price of a home fell 4.0 percent, while the average price was down 2.6 percent.

 The NAHB/Wells Fargo Housing Market Index fell 5 points to 54 in October after rising in four consecutive months. Although all three components of the index declined, current sales and prospective buyer traffic made the largest dent.

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