The AEC Lens
Alex Carrick, Chief Economist at ConstructConnect
Alex Carrick is Chief Economist for ConstructConnect. He is a frequent contributor to the Daily Commercial News and the Journal of Commerce. He has delivered presentations throughout North America on the Canadian, United States and world construction outlooks. A trusted and often-quoted source for … More »
A Diversity of Performances among U.S. Building Product Manufacturers
December 3rd, 2015 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup
While U.S. national output and total employment have reached their previous peak levels, from before the Great Recession, and are now exploring new higher territory, construction activity is continuing to lag.
There are numerous way to illustrate this point. Today’s Economy at a Glance will focus on just one, utilizing a consistent set of data from the Federal Reserve representing the activity levels of a variety of building product manufacturers (BPMs).
The accompanying graphs show indices of industrial production, from 2000 to the present, in eight building commodity areas. In each instance, the index base is 2012’s monthly average set equal to 100.0.
North American Industrial Classification System (a.k.a., NAICS) numbers have been included in the ‘data source’ references at the bottom of each chart.
For ‘plywood’, ‘cement’ and ‘architectural and structural metals (e.g., engineered buildings)’, the trend in activity levels since the 2008-2009 Big Dip has been clearly up, but not yet to a degree indicating full recovery.
Plywood production (Graph 1) has advanced 30% versus its trough position, but needs to improve another 30% to regain its pre-recession ‘norm’.
The cement index (Graph 2), which plunged 60% in the dry spell, has experienced a substantial upturn, but will need a further journey skyward of about 40% to get back to where it started.
(The Fed publishes a concrete industrial price index as well. It’s such a close mirror of the cement index, there’s little reason to present it here.)
The architectural and structural metals index (Graph 3) sank 32% between mid-2007 and early-2010. It has since made up about one-third of that descent, leaving it still about two-thirds of the way to go.
The production index for ventilation, heating and air-conditioning equipment (i.e., the HVAC sector – Graph 4) has returned to near where it was in the 2000 through first-half 2005 period, before there was a series of spikes from second-half 2005 to first-half 2008.
Glass and glass products manufacturers (Graph 5) have also, lately, seen a more bullish return of activity levels. The current index value is on a par with the 2001 through early-2008 time frame.
Furthermore, the volatility (i.e., the amplitude from peak to trough) of the glass products index has been less than for most of the other series.
Glass, especially as it is employed in exterior glazing products, is one construction material that is currently being reported in short supply in certain local markets. Anecdotally, Manhattan is the number-one hot spot.
Electric lighting equipment (Graph 6) faltered in the recession and has made no improvement since. This is surprising, given the current emphasis on ‘sustainability’ when owners and project developers set their construction goals
New LED and compact-fluorescent lighting systems, triggered by motion-sensor technology, and integrated into heating and cooling systems, place this sector in the forefront of ‘green’ building design.
But its fate is nowhere near as bad as in the ‘communication and energy wire and cable’ industry (Graph 7). The current level of activity in this sector, while modestly ahead of 2009’s, is still less than half what was being experienced in the year 2000.
But keep in mind that there was a dot.com boom (followed by a wrenching bust) at the turn of the millennium. One seemingly logical inference from Graph 7 is that there has been a growing preponderance of communication work that is now wireless.
Finally, production levels of what is termed ‘construction machinery’ – although the NAICS definition for this designation also includes some mining and forestry equipment – appear in Graph 8.
This category of work has staged a decent comeback, which appears even more impressive when account is taken of an export component now being bound and sometimes blocked by a U.S. dollar that has soared against almost all other major international currencies.
Category: CMD Group