Tag Archive for 'residential construction'

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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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Nonresidential Construction Employment Declines In December

CEU2“It is discouraging to observe losses in momentum in both the broader economy and in nonresidential construction; however construction-specific and economy-wide employment data are likely to improve in the months ahead.”—ABC Chief Economist Anirban Basu.

Employment-January2014National construction employment decreased by 16,000 jobs in December, according to a Jan. 10 report by the U.S. Department of Labor. Nonresidential construction registered the bulk of job losses, contributing 88.1 percent of total construction industry job loss and losing 14,100 positions on a monthly basis.

The national construction unemployment rate grew to 11.4 percent on a non-seasonally adjusted basis compared to 8.6 percent in November and 13.5 percent one year ago.

“It is discouraging to observe losses in momentum in both the broader economy and in nonresidential construction; however construction-specific and economy-wide employment data are likely to improve in the months ahead,” said Associated Builders and Contractors Chief Economist Anirban Basu.

Across all industries, the nation added 74,000 jobs in December, with the private sector gaining 87,000 jobs and the public sector losing 13,000 jobs. According to the Bureau of Labor Statistics’ household survey, the national unemployment rate fell from 7 percent in November to 6.7 percent in December—the lowest unemployment rate since October 2008. Unfortunately, the unemployment decline is largely due to the labor force participation rate dipping back to its cyclical October 2013 low of 62.8 percent. Labor force participation is now at its lowest rate since March 1978.

“Compounding the gloomy jobs number and the historically low labor participation rate, long-term unemployment reached 3.9 million, or 37.7 percent of the labor force,” Basu said. “While this is below the post-recession peak, it is still the higher than at any other time in the past 60 years.

“A vast majority of the jobs added in December originated in low-wage sectors,” said Basu. “Leisure and hospitality, retail trade, and temporary help services accounted for 104,700 new jobs, or 141 percent of the monthly gain. Today’s jobs report shows that the U.S. economy is not quite ready to take off.”

Nonresidential building construction employment fell by 1,200 jobs for the month but is up by 10,000 jobs (1.5 percent) since December 2012.

Residential building construction employment rose by 4,800 jobs in December and is up by 26,800 jobs (4.7 percent) on an annual basis.

Nonresidential specialty trade contractors lost 12,900 jobs for the month, but employment is up by 11,600 jobs (0.5 percent) from the same time last year.

Residential specialty trade contractors gained 1,400 jobs in December and have added 73,000 jobs (4.9 percent) from December 2012.

Heavy and civil engineering construction lost 8,800 jobs in December, but segment job totals are up by 500 (0.1 percent) on a year-over-year basis.

To view the previous Employment report, click here.

Wells Fargo Reports: Construction Spending Posts Another Gain in July

Wells_Fargo_Securities_logoConstruction spending rose 0.6 percent in July, which shows consistent improvement. While private residential and nonresidential spending increased on the month, public outlays were down 0.3 percent. Third Quarter Off to a Good Start 

Construction outlays rose 0.6 percent in July to a $900.8 billion annualized pace. Previous months’ data were also solidly upwardly revised. Further confirming upward momentum in the housing market, private residential spending was up 0.6 percent and has posted positive gains since October 2012. Digging into the details of private residential, gains were broad-based with single-family, multifamily and home improvement all increasing on10-Year Treasury Yield the month. Another encouraging component of the report was the gain in private nonresidential, which rebounded from a decline in June. Private nonresidential rose 1.3 percent in July. However, public spending remained weak due to a 0.4 percent decline in state and local outlays. Federal spending rose 1.1 percent in July.

Single-Family Outlays Remain Solid

Gains in private residential spending continue to reaffirm strength in the housing market. Builder sentiment remains solid and has shown consistent increases over the past four months. The level is now the highest since late 2005, with more builders seeing conditions as “good” than “poor”. That said, other monthly housing market indicators appear to be at odds with construction spending and sentiment. Single-family housing starts and permits both declined in July, and new home sales plunged on the month. We suspect that recent weakness in 10-Year Treasury Yieldstarts and new home sales activity is only temporary and not the beginning of a trend. Indeed, while some of the slowdown on the month can be blamed by the rapid increase in mortgage rates, we suspect that extremely damp weather in the South attributed to some of the weakness in new home sales activity. With the housing recovery continuing to be driven by fundamentals, we expect further gains in single-family outlays in the coming months.

Multifamily spending has also seen a string of positive gains. The apartment vacancy rate is now at its lowest level in more than a decade at 4.3 percent, and demand remains fairly robust across the country. Deliveries are expected to pick up in the coming quarters and activity should remain solid.

Nonresidential Construction Outlays Improve10-Year Treasury Yield

Private nonresidential outlays have been somewhat of a moving target in recent quarters with revisions quite sizeable. At last, July’s revision to previous months’ data suggest structures will contribute a little more to real GDP growth in the second quarter, all things equal. The July report also suggests that the third quarter is off to a good start. Lodging, commercial and power were some of the largest contributors to the headline. Looking ahead, architectural billings, which typically lead construction spending by about a year, posted its third monthly increase in July.

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