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8 Mid-May Economic Nuggets

Monday, May 20th, 2019

Article source: ConstructConnect

Inflation, Stock Markets and Interest Rates

Mid-May Economic Nuggets Graphic

The U.S. ‘all-items’ Consumer Price Index (CPI) in April was +2.0% year over year. The ‘core’ rate of inflation, which omits mainly food and energy items that display notable price volatility, was +2.1% y/y. It seems that inflation, at least for now, has become untethered from what is transpiring in the economy at large. A highly-charged jobs market and solid gross domestic product (GDP) growth aren’t causing the usual (i.e., pre-recession) ascending price effect.

Technological advances by leading firms in many industries have helped to keep price increases retrained. Examples include Amazon in retail; Uber in ride-sharing; and iPhones in photography.

The big economic issue at present is the escalation of America’s trade dispute with China. The major stock market indices, which were recovering nicely from setbacks in December, have lately been wobbling once again. Investors had the impression that a trade deal was imminent.

The Federal Reserve has come under criticism for paying more attention to the stock markets than the ‘real economy’ when setting its interest rate policy. Since inflation has been taken out of the equation, it will be interesting to observe what will prompt the next Fed interest rate move.

With the foregoing as backdrop, there are also the following nuggets to be gleaned from the latest public and private agency data releases. The soil is fertile and the crop abundant.

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U.S. Labor Market Strength Continued to Impress in April

Tuesday, May 7th, 2019

Article source: ConstructConnect

President Trump will be of two minds when he sees the latest labor market numbers from the Bureau of Labor Statistics (BLS). April’s Employment Situation report records another month of exceptional jobs growth, +263,000, and a notable decline in the unemployment rate to only 3.6%, which is as low as that metric has been in half a century. Furthermore, 3.6% was the seasonally adjusted (SA) rate. The not seasonally adjusted (NSA) jobless level was even tighter, at 3.3%.

U.S. Labor Market Strength Graphic

But the good news with respect to jobs means that there is now even less likelihood that the Chairman of the Federal Reserve, Jerome Powell, will pay heed to the President’s advice to lower interest rates. The needle on the central bank’s ‘yield meter’ has undoubtedly swung away from mildly dovish towards perhaps hawkish once again.

Through the first one-third of 2019, America’s monthly average (net) jobs creation has been +205,000, a quite solid level of increase. But placing it in perspective, it’s still -6.7% compared with January-to-April 2018’s comparable figure of +220,000.

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Prolonged Streak of U.S. Beating Canada in Q/Q GDP Growth

Friday, May 3rd, 2019

Article source: ConstructConnect

Explanation of Quarterly and Annual GDP Percent Change Calculations

The mathematics employed to calculate ‘real’ gross domestic product (GDP) levels and rates of change are more convoluted than one might suppose. For a new quarter, GDP line items (e.g., consumption, investment, government spending and exports/imports), after removing the effects of inflation, are added up and adjusted for seasonality. They are also expressed as if they are annual results – i.e., the quarterly figures are ‘blown up’ to a corresponding annual level.

U.S. Beating Canada in Q/Q GDP Growth Graphic

The ‘official’ GDP figure for any year is the average of the levels for the four quarters within that year and the year-to-year growth rate is the percentage change between annual averages.

The figure most often quoted by the press, however, is a quarter-to-quarter GDP growth rate annualized. Such a number compares latest-quarter GDP with previous-quarter GDP to derive a percentage change. Then that percentage change is compounded to the power of four (i.e., ‘annualized’) to account for four quarters in a year.

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Series (2 of 7): Rankings of States by Industrial Subsector Jobs – Financial Services

Wednesday, January 16th, 2019

Article source: ConstructConnect

Construction spending in various type-of structure categories is driven by economic circumstances within specific industrial subsectors. For example, manufacturers set the pace in industrial construction.

Rankings of States by Industrial Sub-Sector Jobs – ‘Weight’ and ‘Concentration’ Maps for Financial Services Graphic

Good health in the leisure and hospitality sector provides the backing for new hotel and motel work. And jobs levels in information and financial services, as well as in more rapidly expanding fields of endeavor such as computer systems and design services, establish the need for additional office space and commercial tower square footage. (See, “Shifts in Office Jobs and Implications for Commercial Tower Construction.”)

This article is the second in a series of seven that examines key industrial sectors to determine where they are most prominent regionally. Rankings of state strength in each industrial subsector are based on both ‘weight’ and ‘concentration’ of relevant employment. ‘Weight’ is simply the number of jobs in the industrial subsector in each state. ‘Concentration’ is each state’s number of jobs in the subsector divided by the state’s population. In effect, it’s a ‘per capita’ figure, except that it’s expressed as number of jobs per million population.

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Series (1 of 7): Rankings of States by Industrial Subsector Jobs – Manufacturing

Tuesday, January 15th, 2019

Article source: ConstructConnect

Construction spending in various type-of structure categories is driven by economic circumstances within specific industrial subsectors. For example, manufacturers set the pace in industrial construction.

Rankings of States by Industrial Sub-Sector Jobs – ‘Weight’ and ‘Concentration’ Maps for M

Rankings of States by Industrial Sub-Sector Jobs – ‘Weight’ and ‘Concentration’ Maps for Manufacturing Graphic

anufacturing Graphic

Good health in the leisure and hospitality sector provides the backing for new hotel and motel work. And jobs levels in information and financial services, as well as in more rapidly expanding fields of endeavor such as computer systems and design services, establish the need for additional office space and commercial tower square footage. (See, “Shifts in Office Jobs and Implications for Commercial Tower Construction.”)

This article is the first in a series of seven that examines key industrial sectors to determine where they are most prominent regionally. Rankings of state strength in each industrial subsector are based on both ‘weight’ and ‘concentration’ of relevant employment. ‘Weight’ is simply the number of jobs in the industrial subsector in each state. ‘Concentration’ is each state’s number of jobs in the subsector divided by the state’s population. In effect, it’s a ‘per capita’ figure, except that it’s expressed as number of jobs per million population.

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November Jobs Creation: U.S. +155,000; Canada +94,000

Friday, December 7th, 2018

Article source: ConstructConnect

 

There was a dramatic reversal in fortune on the jobs front between the U.S. and Canada in November.

November Jobs Creation: U.S. +155,000; Canada +94,000 Graphic

It wasn’t that the U.S. number from the Bureau of Labor Statistics (BLS) was so bad. At +155,000, it slowed from +237,000 the month before, but it was still a solid increase.

Rather, it was that Canada set a blistering pace. Statistics Canada’s figure of +94,000 jobs was the biggest monthly increase in more than six-and-a-half years, dating back to March 2012 (also +94,000).

Canada’s unemployment rate in November improved to 5.6%, the lowest it’s been in more than 40 years.

America’s unemployment rate stayed the same in November as in October, but keep in mind that the current level of 3.7% is the tightest in almost 50 years.

Canada may have had a better November than the U.S., but for year-to-date 2018, it’s been the latter that has been vastly outperforming the former.

U.S. monthly average jobs creation so far this year has been +206,000, +12.7% above last year’s comparable figure of +183,000.

Canada’s monthly average jobs bump to date in 2018 has been only +14,000, -58% versus January-November 2017’s climb of +33,000.

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Construction Jobs Regionally by Level and Change, U.S. and Canada

Thursday, December 6th, 2018

Tables 1 through 3 accompanying this article detail the latest (October 2018) statistics on construction employment regionally in the U.S. and Canada.

Construction Jobs Regionally by Level and Change, U.S. and Canada Graphic

Table 1 is a ranking of states, D.C. and Puerto Rico for the U.S. and provinces and territories for Canada by construction employment levels.

Table 2 is a ranking of states, D.C. and Puerto Rico for the U.S. and provinces and territories for Canada according to year-over-year (y/y) nominal changes in construction employment levels.

Table 3 is a ranking of states, D.C. and Puerto Rico for the U.S. and provinces and territories for Canada by y/y percentage changes in number of construction jobs.

With respect to number of construction jobs (Table 1), the four most populous states in America are the frontrunners. California (874,000) is in first place, followed by Texas (774,000), Florida (553,000) and New York (415,000).

After New York, there’s a sizable step down to fifth-place Pennsylvania (266,000).

There are six other states with construction levels exceeding 200,000 – Illinois (243,000); Ohio (238,000); North Carolina (222,000); Washington (218,000); Georgia (+207,000); and Virginia (206,000).

(By the way, how populous are California, Texas, N.Y. and Florida? Combined, they account for the residences of one out of every three Americans.)
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Top 10 Project Starts in the U.S. – April 2017

Monday, May 22nd, 2017

Article source: ConstructConnect

The accompanying table records the top 10 project starts in the U.S. for April 2017.

2017-05-12-Top-10-US-Projects-Apr-2017

There are several reasons for highlighting upcoming large projects. Such jobs have often received a fair amount of media coverage. Therefore, people in the industry are on the lookout for when jobsite work actually gets underway. And, as showcase projects, they highlight geographically where major construction projects are proceeding.

Also, total construction activity is comprised of many small and medium-sized projects and a limited number of large developments. But the largest projects, simply by their nature, can dramatically affect total dollar and square footage volumes. In other words, the timing and size of these projects have an exaggerated influence on market forecasts.
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U.S. Corporate Profit Growth Stymied by Energy Sector Slide

Tuesday, April 5th, 2016

Article source: CMDGroup

North America’s major stock market indices have taken investors on a ‘theme park’ ride over the past 12 months − as can be seen from Graph 1. More often than not, it hasn’t been much fun.

There were substantial dips for all four indices – Dow Jones Industrials (DJI), the S&P 500, NASDAQ and the Toronto Stock Exchange (TSX) − in September of last year, followed by recovery for the U.S. series, and then another crater in the January-February period of this year.

Canada’s TSX stayed mainly down once it faltered in the fall of last year.

In the most recent month, however, there were notable improvements once again. At the close of trading in March 2016, the DJI, S&P 500 and NASDAQ were all within 1.0% of their levels achieved a year prior.

The TSX moved +4.9% during the month of March, but was still -9.4% year over year.

Worry has centered on the likely performance of corporate profits. It’s well known that in the energy sector, the low price of oil is taking a heavy toll on the revenues of exploration and extraction companies, as well as their service and material suppliers.

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A Dozen Mid-February Economic Nuggets

Friday, February 12th, 2016

Article source: CMDGroup

Spending time in U.S. stock markets lately has not been a walk in the park. Drooping equity prices are a symptom of assorted maladies. The three that stand out most prominently are as follows. First, a great many people are worried about China’s economy and especially the state of its banking sector. There are thought to be way too many shaky loans in danger of crumbling if growth continues to decelerate. The subsequent drop in value of the yuan won’t be pretty.

Second, on account of a shockingly low international price for oil, investment in the U.S. energy sector has gone into a tailspin, affecting certain regions of the country more severely than others.

And third, the uplift in value of the U.S. dollar is limiting the ability of American manufacturers to win export sales. Some of the nation’s biggest firms are being negatively affected the most.

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