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Mid-June Economic Nuggets Focusing on Retail, Inflation and Housing Starts

Friday, June 21st, 2019

Article source: ConstructConnect

well ask, since it went by so fast − there are the following economic nuggets from various private and public sector firms and agencies to be aware of and mull over.

Mid-June Economic Nuggets Graphic

Consumer Spending Becomes Lethargic

In the ‘second estimate’ of U.S. Q1 2019 ‘real’ (adjusted for inflation) gross domestic product (GDP) published by the Bureau of Economic Analysis (BEA), the quarter-to-quarter annualized pickup was a strong +3.1%. Consumer spending, however, which usually plays a major role in GDP’s advance, was relatively quiet this time around. The Personal Consumption Expenditures (PCE) line item of GDP was only +1.3% per annum. It was soundly beaten by Gross Private Domestic Investment, +4.3%, and an improvement in net foreign trade, with exports +4.8% and imports, -2.5%. Investment was led by spending on intellectual property products, +7.2%.

A shift towards lethargic consumer spending has also become apparent in recent retail sales figures. Total U.S. retail and food services sales in May were +3.2% year over year. Retail as a standalone was +3.1% and ‘food services and drinking places,’ +3.7%. Less than a year ago, in July 2018, retail sales were +6.2% y/y and ‘restaurant, fast food, bar, and tavern’ sales, +9.6%.

Retail Sales Mainly in a Range of +3.1 to +3.7% Y/Y

Within retail, and as set out in Graph 1, several shopkeepers achieved May sales increases ranging from +3.1% to +3.7% y/y. ‘Health care and personal care stores’ rang up receipts of +3.4% y/y; ‘general merchandise stores’, +3.3%; and ‘gasoline stations,’ +3.2%. Gasoline station sales, despite drawing more from aligned variety store activities, can still be heavily influenced by fluctuations in the price of petrol. In the latest month, the price of gas was flat compared with 12 months prior, and therefore had a neutral impact on cash register receipts at service stations.

May’s Weakening in U.S. Jobs Growth and the Inverted Yield Curve

Thursday, June 13th, 2019

U.S. Jobs +75,000 in May, but Flat After Revisions

Article source: ConstructConnect

The latest Employment Situation report from the Bureau of Labor Statistics (BLS) records a gain of +75,000 in total U.S. jobs in May. The +75,000 month-to-month increase was the second lowest so far this year. February’s figure was worse at +56,000.

May’s Weakening in U.S. Jobs Growth and the Inverted Yield Curve Graphic

What’s hidden, however, unless one digs a little deeper, is the fact that total U.S. employment in May really didn’t increase at all. The total jobs number now being reported for May, at 151.095 million, is the same as the total jobs number that was published a month ago for April. The explanation lies in the fact that April’s number has been revised down by -75,000.

The national unemployment rate in May stayed extremely tight, at 3.6%, the same as in the previous April. The participation rate likewise remained steady, at 62.8%.

The composition of May’s +75,000 jobs performance was an interesting combination of only +8,000 in goods production, +82,000 in the private services-providing sector and -15,000 with government. The public sector’s jobs loss was at the state (-10,000) and local (-9,000) levels, as Washington made a minor upwards staffing adjustment (+4,000).


7 Best and 7 Worst U.S. States for Y/Y and Q/Q GDP Growth

Thursday, May 30th, 2019

Article source: ConstructConnect

Table 1 sets out the latest published year-over-year and quarter-to-quarter ‘real’ (i.e., adjusted for inflation) gross domestic product (GDP) growth rates for the 50 U.S. states, plus District of Columbia. The data is made available by the Bureau of Economic Analysis (BEA).

7 Best and 7 Worst U.S. States for Y/Y and Q/Q GDP Growth Graphic

The year-over-year comparisons on the left-hand side of Table 1 are based on 2018 versus 2017 results. The quarter-to-quarter comparisons on the right-hand side of the table are for Q4 2018 versus Q3 2018. The q/q percentage changes are compounded to the power of four, making them equivalent to annual growth rates. (The ‘real’ dollar volumes underlying the q/q percent change calculations have been seasonally adjusted.)

7 State GDP Growth Headliners

Above the first bold horizontal line in Table 1 are the 15 states that have performed best either year-over-year or quarter-to-quarter. Washington recorded the strongest GDP growth y/y, at +5.7%, while Texas ranked number one for q/q gain, at +6.6%.

Seven states were in the Top 15 for both y/y and q/q GDP growth rates. Those seven appear in green shading. They are: Washington, Idaho, Arizona, California, Colorado, Nevada, and Texas.


Signs of Consumer Fatigue in U.S. and Canadian Retail Sales

Tuesday, May 28th, 2019

Article source: ConstructConnect

An ‘Overhang’ of Space in ‘Bricks and Mortar’ Retail

With jobs growth so strong and incomes rising, a main driving force behind the ten-year expansion in U.S. gross domestic product (GDP) has been consumer spending. Retail sales as a key component of consumer spending, however, have been taking quite a different path than in the past. Physical shopping outlets have been closing at a truly alarming rate, to be replaced by warehouses to fulfill purchases made over the Internet.

Signs of Consumer Fatigue in U.S. and Canadian Retail Sales Graphic

The construction industry welcomes the proliferation of distribution centers but laments the loss of ‘bricks and mortar’ retail building activity. Moreover, it’s not just the pullback in the square footage of retail space that is disappointing for construction. Just as big a problem is the ‘overhang’.

Vast amounts of empty space have been accumulating that will require years of gradually increasing occupancy to fill back up again.

U.S. Retail and Food Services Sales

When the 2008-09 recession was at its worst, U.S. total retail sales nosedived by nearly -13.0% year over year. As Graph 1 shows, U.S. retail sales then recovered in 2010 and 2011 to between +5% and +10% y/y. For the most recent seven-plus years, they’ve been mainly between 0% and +5%.

An often-quoted target for y/y ‘current dollar’ retail sales is +5%. After ‘normal’ inflation is factored out, +5% becomes +3% in ‘real’ terms, which provides healthy backing for GDP advancement.


Explosive Jobs Growth in Canada’s April Labour Force Report

Tuesday, May 14th, 2019

Article source: ConstructConnect

Canadian total employment shot up by +106,000 jobs in April, and the nation’s unemployment rate declined to 5.7%, according to the latest Labour Force Survey findings from Statistics Canada.

Explosive Jobs Growth in Canada’s April Labour Force Report Graphic

March’s jobless rate had been 5.8%. The month-to-month improvement in the out-of-work proportion would have been greater if not for the fact that the ‘participation rate’ climbed from 65.7% to 65.9% between the third and fourth months of this year. (A higher participation rate means that more people are actively on the hunt for jobs.)

The average monthly gain in total employment in Canada through the first third of 2019 has been +55,000, a robust hike. From January to April of last year, the average monthly change in the total Canadian jobs count was -2,000.

Since April 2018, total employment in Canada has risen by +426,000 jobs, a notable achievement.


U.S. Put-in-place Construction Spending Hits a Soft Spot

Monday, May 13th, 2019

Article source: ConstructConnect

Total U.S. put-in-place construction spending, after increasing steadily (although slowly) for seven years, from 2011 through 2017, has lost upwards momentum over the past year and a bit. The cause of the overall weakness has been a retreating residential sector. Nonresidential has continued to exhibit a decent degree of uplift.

U.S. Total Put-in-place Construction Spending Graphic

For various type-of-structure categories of construction, the charts in this article showcase three data sets – (1) seasonally adjusted (SA) monthly ‘current’ dollar volume levels (where ‘current’ means not adjusted for inflation); (2) month-to-month percent changes in the dollar volume; and (3) year-over-year percent changes in the dollar volume.

As shown in Graph 1 below, total spending on U.S. construction reached its zenith in May of last year, at $1.324 trillion. Since that peak, it has fallen by 3.2%, to land at $1.282 trillion in the latest month for which data is available, March 2019.

The average of month-to-month percent changes for total U.S. put-in-place construction spending during the past ten years has been +0.4%. In March 2019, the month-over-month figure was in negative territory, at -0.9%.

Over the past 10 years, the average of year-over-year percent changes recorded each month for total put-in-place construction has been +4.2%. In March 2019, the year-over-year change was -0.8%.

The ‘glory days’ for U.S. put-in-place construction have, for the moment at least, receded.

Total put-in-place construction was doing its best between 2012 and early 2017, when the y/y percent change curve was consistently above the 10-year average line, as seen in the lower portion of Graph 1. Recently, U.S. put-in-place construction has fallen off its earlier faster pace.


A Chill in U.S. February Employment Numbers, Canada’s Performance Perkier

Friday, March 8th, 2019

Article source: ConstructConnect

February’s Employment Situation report from the Bureau of Labor Statistics delivered the kind of U.S. total employment change, month to month, that we have become unaccustomed to seeing. Net jobs growth was quite weak, at only +20,000. It’s been 17 months since the figure was comparably low, +18,000 in September 2017.

A Chill in U.S. February Employment Numbers; Canada’s Performance Perkier Graphic

Over the last several years, the month-to-month jobs gain has usually been at least +175,000, often exceeding +200,000. In the first month of this year, January, it was +311,000.

On the brighter side, the unemployment rate in the latest month improved to 3.8% from 4.0% in the prior period.

There was only one major industrial sector with a substantial pick-up in nominal number of jobs in January, ‘professional and business services,’ +42,000. The staffing increases were evenly and widely spread among segments of the sector (e.g., accounting, design, computer, and help-wanted services).

‘Education and health services’ added just 4,000 jobs, but that was because education services declined by -19,000 jobs. ‘Health care and social assistance’ wasn’t shy about hiring, lifting its combined payroll by +23,000.


2018 Residential Construction Market Highlights − U.S. and Canada

Thursday, March 7th, 2019

Article source: ConstructConnect

Issuance of year-end data on U.S. new homebuilding activity was delayed due to the partial government shutdown which kept Census Bureau workers away from their desks.

2018 Residential Construction Market Highlights − U.S. and Canada Graphic

Over the past month, however, there have been diligent catch-up efforts and December’s preliminary residential ‘starts’ and ‘permits’ numbers are now available.

There are ‘starts’ at the national level; but for states and cities, the figures are based on building permits.

This article will mainly concentrate on new home groundbreakings in America’s largest metropolitan statistical areas (MSAs). ‘Permits’ in units will be accepted as equivalent to ‘starts’.

‘Permits’ are first published by the Census Bureau, then repackaged in a more user-friendly form by the National Association of Home Builders (NAHB).

When Canadian statistics are mentioned, they have been made available by Canada Mortgage and Housing Corporation (CMHC) and they are ‘starts’.


Rankings of States and Provinces by Roadwork Construction Starts

Monday, March 4th, 2019

Article source: ConstructConnect

The table and maps accompanying this article feature comparisons of highway, street and roadwork construction starts in all the states, plus District of Columbia, in two ways: (1) by dollar-volume level, taking the annual average over the past two years (2017 and 2018); and (2) per capita (i.e., the dollar volume in (1) divided by each individual state’s population).

Rankings of States and Provinces by Roadwork Construction Starts Graphic

In some states, there can be considerable variation in the dollar volume of roadwork starts from one year to the next. Therefore, it seems only fair to smooth the series out a bit, and hence the reason for utilizing a latest-two-years average.

On the left-hand side of Table 1, there is a ranking of all states and D.C. according to their level of roadwork construction starts. Sixteen states have exceeded an annual average of $1.0 billion over the past two years and they are highlighted in Map 1. Washington state, at $995 million, and New Jersey, at $980 million, just missed the cut.


Minimal Progress in Fixing U.S. and Canadian Foreign Trade Difficulties

Wednesday, February 27th, 2019

Article source: ConstructConnect

Early in February, there should have been the release of December 2018 foreign trade statistics for both the U.S. and Canada. The publication schedule has been thrown off track, however, by the 35-day partial U.S. government shutdown, which kept Census Bureau workers off the job.

U.S. and Canadian Foreign Trade Graphic

Since three-quarters of Canadian exports are shipped to the U.S. and two-thirds of Canadian imports are drawn from the U.S., Statistics Canada felt it could not publish accurate numbers either. Therefore, the latest statistics available for study, both south and north of the border, are for November. A statement has been issued that the target date for dissemination of December findings is March 6th.

Nevertheless, there is much to be learned from the material that is at hand. The bottom line is that there has been minimal progress lately in fixing significant U.S. and Canadian foreign trade difficulties.

Graphs 1 and 2 tell the story. Canada’s trade deficit (annualized) in November was -$25 billion CAD; America’s was a massive -$592 billion USD.


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