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Alex Carrick, Chief Economist at ConstructConnect
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 »

U.S. and Canada December Jobs Reports Should Quell Some Jitters

 
January 8th, 2016 by Alex Carrick, Chief Economist at ConstructConnect

Article source: CMDGroup

According to the Bureau of Labor Statistics (BLS), the U.S. economy recorded its second-best month for jobs-growth last year in December, +292,000. Only October’s +307,000 was better.

2015 ended with a gain (+292,000) that was considerably above the monthly average for the year as a whole (+221,000). There is speculation by some analysts that December’s strong result may have been aided by weather that was unseasonably warm.

The final tally of the total number of jobs in America at year-end 2015 was ahead by 2.65 million compared with 2014. One big story has been the shift in the composition of those jobs. According the ‘household survey’ of employment, all of the grand-total increase came in full-time work. The total number of part-time jobs contracted slightly.

Earlier, after the Great Recession, concern was often expressed that while the jobs picture was improving, too often the work being offered was of the poorer quality, lower-paying and less-stable part-time variety. This dilemma appears to have self-corrected in the latest 12 months.

Read the rest of U.S. and Canada December Jobs Reports Should Quell Some Jitters

Eight Demography Charts that Explain U.S. Construction Activity

 
January 7th, 2016 by Alex Carrick, Chief Economist at ConstructConnect

Article source: CMDGroup

Talk to a demographer and he or she is likely to tell you that everything important that is happening in society and business can be explained by their practice or science.

As an economist, I don’t fully subscribe to such an assertion. Besides, what would I do if I didn’t have interest rates, inflation and government policy to mentally juggle as well as the study of demography?

But I don’t dismiss the claim out of hand either.

It does warrant admitting that population level, change and age-structure over time are key determinants of construction activity in several major type-of-structure categories.

That will be the focus of this Economy at a Glance, in two parts. The story will be told through the use of eight graphs.

Read the rest of Eight Demography Charts that Explain U.S. Construction Activity

U.S. Put-in-place Construction Growth to be near 9% in 2016 and 2017 (Part 2 Comprised mainly of a Table and Graphs)

 
December 31st, 2015 by Alex Carrick, Chief Economist at ConstructConnect

Article source: CMDGroup

CMD is projecting that by 2017, total annual U.S. put-in-place (PIP) construction spending will rise to $1.25 trillion. That’s versus an estimated $1.06 trillion in 2015 and a forecast $1.15 trillion in 2016.

PIP numbers, both current and historical, are provided by the Census Bureau. (For an explanation of the differences between CMD’s starts statistics and PIP figures, please see Part 1 of this Economy at a Glance.)

The total will reach that $1.25 trillion level through current (i.e., not adjusted for inflation) dollar gains of +8.6% in 2016 and +8.8% in 2017, on the heels of a +10.0% year in 2015.

Residential work, which suffered a more severe pull-back in activity than the non-residential building category, during the Great Recession, will mount a slightly faster comeback (+10.5% in each of 2016 and 2017, after +11.5% in 2015).
Read the rest of U.S. Put-in-place Construction Growth to be near 9% in 2016 and 2017 (Part 2 Comprised mainly of a Table and Graphs)

U.S. Put-in-place Construction Growth to be near 9% in 2016 and 2017 (Parts 1)

 
December 23rd, 2015 by Alex Carrick, Chief Economist at ConstructConnect

Article source: CMDGroup

The focus for CMD’s construction statistics, both in the U.S. and Canada, is on actual and forecast levels of starts.

There is another data set supplied by government agencies – i.e., the Census Bureau and Statistics Canada − known as the put-in-place (PIP) investment spending series.

For ‘starts’, the total value of a project is entered in the month when, according to a best estimate, ground is broken. The starts are often referred to as ‘lumpy’, since the largest projects play outsized roles.

Starts totals are built-up from the summation of all individual projects that are in the data base.

Conceptually, the PIP data set differs in that it simulates progress payments as projects proceed.

For example, while PIP numbers are actually based on owners’ and others’ estimates of capital  spending across a total universe of construction activity, a $60 billion office building beginning in July of this year will be theoretically captured (approximately) as $20 billion appearing in 2015; $30 billion in 2016; and the final $10 billion in 2017.
Read the rest of U.S. Put-in-place Construction Growth to be near 9% in 2016 and 2017 (Parts 1)

A Momentous Fed Rate Hike as Afterthought

 
December 23rd, 2015 by Alex Carrick, Chief Economist at ConstructConnect

Article source: CMDGroup

The Federal Reserve has been waffling about raising interest rates for so long, it seems like an afterthought now that the step has finally been taken.

On December 16, the FOMC (Federal Open Market Committee) moved up the federal funds rate from a range of 0.00%-0.25% to 0.25%-0.50%.

It’s a disservice not to acknowledge the momentous nature of this event.

Nearly a decade has passed since the last rate hike. Over the past seven years, the yield has been flat and barely above zero.

The current shift upward has little to do with the fed’s twin mandates of job creation and achieving an inflation target of 2.0%.
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State and Province Rankings by Year-to-date Engineering/Civil Starts

 
December 21st, 2015 by Alex Carrick, Chief Economist at ConstructConnect

Article source: CMDGroup

In the previous Economy at a Glance, there was an examination of states and provinces according to their January-to-November 2015 dollar volumes and year-to-date percentage changes of non-residential building construction starts.

The data source is CMD’s web-accessible ‘Insight’ research material.

This time, we’ll look at starts that are heavy engineering/civil in nature. Again, Canadian provinces will be mixed in with U.S. states.

Newfoundland and Labrador, Prince Edward Island, Nova Scotia and New Brunswick have been condensed into an ‘Atlantic Canada’ designation.

In the engineering construction category, however, those easternmost provinces should not be lightly dismissed.
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States and Provinces Ranked by Year-to-date Non-residential Building Starts

 
December 21st, 2015 by Alex Carrick, Chief Economist at ConstructConnect

Article source: CMDGroup

The table accompanying this Economy at a Glance tries something new. It not only ranks U.S. states by year-to-date dollar volumes of non-residential building construction starts, and by year-over-year percentage changes, but adds Canadian provinces to the mix as well.

While the overall population of the United States is much larger than for Canada, 322 million compared with 36 million, the geographic size of most Canadian provinces is larger than for all but a few American states.

Furthermore, the Canadian construction scene is more dominated by mega-sized natural-resource projects − in oil and natural gas, metals and minerals and power generation – although this effect becomes more pronounced in heavy engineering/civil construction work.

In complementary fashion, that will be the subject of the next EAAG.
Read the rest of States and Provinces Ranked by Year-to-date Non-residential Building Starts

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.
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U.S. Economy and Construction Markets – Executive Summary for Greenbuild

 
November 13th, 2015 by Alex Carrick, Chief Economist at ConstructConnect

Article source: CMDGroup

  • Globally, the U.S. economy is outperforming all others.
  • Europe is still sluggish and the ECB (European Central Bank) may embark on more quantitative easing. Likewise Japan and its central bank. China’s monetary agency has been lowering interest rates to stimulate growth.
  • In the mid-00s, China accounted for 40% to 50% of world demand for most commodities. With China’s slowdown, prices for raw materials worldwide are in the doldrums.
  • The present economic forecast can be labeled a ‘throwback’ in the sense that it’s similar to the 1990s and earlier when the U.S. always led growth internationally.
  • Furthermore, in those ‘old’ days, U.S. prospects were limited by large-volume foreign energy imports. Now, thanks to domestic fracking, that handicap has been lifted.
  • The U.S. monthly foreign trade deficit (annualized) has shrunk from a range of -$600 to -$800 (billions) to -$400 to -$600 (billions). The reduction is quite positive for GDP.
  • China’s growth has dimmed from a range of +10% to +12% to an ‘official figure’ of +6.5%. Many analysts believe the nation’s annual advance may truly be closer to +3.5%.
  • In an unprecedented turnaround, there have been several months this year when the U.S. has recorded a trade surplus with both OPEC and Saudi Arabia. A cause for headlines.
  • The Federal Reserve will likely begin to hike the federal funds rate in December. The increments over the next couple of years will almost certainly be tiny (100 basis points at most each year, where 100 basis points = 1.00%).
  • When the U.S. economy is functioning on all cylinders, annual ‘real’ (i.e., adjusted for inflation) gross domestic product (GDP) growth is +3.5%. From 2015 through 2017, probably the best that can be hoped for is +2.0% to +2.5%.

Read the rest of U.S. Economy and Construction Markets – Executive Summary for Greenbuild

October’s Jobs Report: Terrific for U.S.; Maybe Marvelous for Canada

 
November 6th, 2015 by Alex Carrick, Chief Economist at ConstructConnect

Article source: CMDGroup

There were worries after the issuance of labor market reports for August and September that indicated month-to-month job creation in the U.S. was slowing to +150,000 or less.

October’s data from the Bureau of Labor Statistics (BLS) sends those clouds scurrying away.

The BLS says the latest net increase in jobs was +271,000, the greatest gain in any month so far this year. It lifts the average in 2015, with only November and December still remaining, to +206,000.

While 2014’s monthly average, January to October, was somewhat faster, at +236,000, a figure of +200,000 or higher warrants an enthusiastic response.

America’s jobless rate now sits at 5.0%, a marginal decline from September’s 5.1%, but more significantly down versus October 2014’s 5.7%.

Unless some other statistics on the U.S. economy (e.g., retail trade) come in far worse than expected, the Federal Reserve will now almost assuredly begin to take action on interest rates at the December meeting of its Open Market Committee (FOMC).

Read the rest of October’s Jobs Report: Terrific for U.S.; Maybe Marvelous for Canada

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