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11 Mid-April Economic Nuggets

Monday, April 16th, 2018

Article source: ConstructConnect

Despite U.S. construction continuing to record a total activity level below potential, the sector should be receiving more bouquets for the bigger role it is playing in the economy overall.

11 Mid-April Economic Nuggets Graphic

Historical data from the Bureau of Labor Statistics (BLS) records that in the year 2000, the number of manufacturing jobs in America’s economy was 17.3 million. The same source records that the number of construction jobs at the turn of the century was 6.8 million.

In 2017 versus 2000, the number of manufacturing jobs in the U.S. was down by 28% to 12.4 million, while the number of construction jobs was ahead by 3%, to 7.0 million.

The clearest way to illustrate the rising importance of construction relative to manufacturing, at least from an employment standpoint, is to express their relationship in terms of a ratio. In 2000, there were four jobs in construction for every ten jobs in manufacturing. Now, there almost six on-site jobs for every ten production-line positions.

More dramatic still has been the shift in favor of construction work in Canada. In 2000, there were 2.2 million Canadian manufacturing jobs compared with 800,000 in construction. By 2017, manufacturing employment had retreated by -23%, to 1.7 million, while construction employment had surged by +75%, to 1.4 million.
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ConstructConnect’s February 2018 Starts -8.4% Versus Prior Five-Year Average

Monday, March 19th, 2018

Article source: ConstructConnect

ConstructConnect announced today that February’s volume of construction starts, excluding residential activity, was $23.6 billion. The latest month-to-month change in the volume of starts, at -24.3%, was more than the usual mild drop from January to February due to seasonality.

2018-03-19-US-Nonresidential-Construction-Starts-February-2018

February of this year relative to February of last year was -35.5%. The level of starts in February 2017, however, was unusually high, $36.6 billion. Comparing February of this year with the average for February in the preceding five years (2013 to 2017), the change was -8.4%. February of this year versus the average for the four years 2013 to 2016 (i.e., omitting 2017) was +2.4%.

Year-to-date nonresidential starts in 2018 have been -26.4% versus January-February of 2017. The first-two-months of this year versus the comparable period in 2016 was a less severe slide of -3.2%.

The starts figures throughout this report are not seasonally adjusted (NSA). Nor are they altered for inflation. They are expressed in what are termed ‘current’ as opposed to ‘constant’ dollars.


View this information as an infographic
.

‘Nonresidential building’ plus ‘engineering/civil’ work accounts for a larger share of total construction than residential activity. The former’s combined proportion of total put-in-place construction in the Census Bureau’s January report was 60%; the latter’s share was 40%.

ConstructConnect’s construction starts are leading indicators for the Census Bureau’s capital investment or put-in-place series. Also, the reporting period for starts (i.e., February 2018) is one month ahead of the reporting period for the investment series (i.e., January 2018.)

Over the past four months, jobs growth in construction has been surging. From November 2017 through January 2018, the month-to-month employment pickups were +42,000, +42,000 and +40,000 respectively. February’s result was a further quickening of the pace, +61,000. The combined four-month gain in construction hiring has been +185,000 jobs. The last time there was such a substantial four-month increase was from January to April 2006, +193,000. In 2006, though, there was a homebuilding boom, fueled by subprime mortgages, that turned into a bust.

Total construction employment is still half a million jobs below its prior peak in 2007, before the onset of the Great Recession. That gap will likely be eliminated quickly. According to the latest Employment Situation report from the Bureau of Labor Statistics (BLS), the U.S. construction sector is generating jobs at a year-over-year rate (+3.7%) that is more than twice as fast as for all workers in the economy (+1.6%). The unemployment rate in the sector in the latest February was 7.8%. Twelve months ago, it had been 8.8%. The jobless figure is traditionally worse in winter.

The Employment Situation report also includes jobs results for three other sectors with close ties to construction. Employment with ‘real estate’ offices in February was +1.7% year over year; with ‘building material and garden supply stores’, +3.9%; and with ‘architectural and engineering services’ firms, +3.3%. Since designers must provide assembly instructions before projects can proceed, their +3.3% staffing increase suggests ongoing healthy construction activity.
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Total U.S. Jobs +313,000 in February; Construction and Manufacturing Combine for +92,000

Tuesday, March 13th, 2018

Article source: ConstructConnect

In February, the U.S. recorded its biggest month-to-month jump in total employment in more than a year-and-a-half, according to the latest Employment Situation report from the Bureau of Labor Statistics (BLS).

Total U.S. Jobs +313,000 in February; Construction and Manufacturing Combine for +92,000 Graphic

A monthly net increase in jobs of +170,000 is acceptable; +200,000 is good; +300,000 is outstanding. February’s number was +313,000. (The last time a better result was achieved occurred in July 2016, at +325,000 jobs.)

The average jobs increase in the first two months of this year has been +20% compared with the average for January-February of last year, +276,000 over +230,000.

Because more people returned to the labor force and the participation rate climbed from 62.7% to 63.0% between January and February, the unemployment rate stayed at 4.1%. The jobless rate has been 4.1% for the past five months in a row, dating back to October 2017.

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Construction Material Costs – Latest PPI, IPPI and RMPI Results, U.S. and Canada

Friday, March 2nd, 2018

Article source: ConstructConnect

When assessing building material cost changes, the primary source for the U.S. is the Producer Price Index (PPI) data series calculated by the Bureau of Labor Statistics (BLS). (The BLS is also responsible for the Consumer Price Index.)

2017-05-05-US-Canada-PPI-Graphic

For Canada, one turns to the Industrial Product Price Index (IPPI) and Raw Materials Price Index (RMPI) data series from Statistics Canada.

While the history of the latest PPI numbers (Table 1) extends to January 2018, the IPPI and RMPI figures (Table 2) are currently available only through December 2017.

The PPI results include specific findings for ‘final demand construction’ (i.e., overall construction) as well as private capital versus government investment, plus five specific type-of-structure sub-categories.

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Ten Mid-February Economic Nuggets – With a Focus on Inflation Fears

Thursday, March 1st, 2018

Article source: ConstructConnect

At the beginning of February, there was a great deal of volatility in the U.S. major stock market indices. They fell into ‘correction’ territory, which in ‘market-talk’ means they dropped by 10% from their peaks, before steadying and heading cautiously upwards again.

Ten Mid-February Economic Nuggets Graphic

Some of the initial downward movement was due to profit-taking, on the heels of years of exceptional equity price gains. As the retreat grew more severe, however, it became harder to explain, especially since the recently passed tax cuts will provide an extra boost to corporate bottom lines.

A consensus explanation gradually emerged and it goes as follows. Yes, the economy is growing rapidly and job creation is outstanding. But maybe output growth and labor market conditions are too good. The level of unemployment has dropped near a historical low. Can wage restraint hold? Furthermore, there is a synchronous world expansion underway and commodities demand is heating up. Prices for key raw materials are climbing once again.

All these developments have the potential to light a fire under inflation. And if inflation is on the rise, the Federal Reserve may feel the need to initiate ‘cooling’ interest rate hikes faster than earlier anticipated. Some economic forecasting firms are already projecting there will be four, not three, interest rate increases this year.

Therefore, perhaps the hottest topic for discussion throughout 2018 will be how inflation is performing. Specifically, is the ‘Consumer Price Index for All Urban Consumers (CPI-U)’ busting free from its +2.0% (year over year) bondage and raising more havoc?

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Construction’s Interaction With High-Tech is Much More Than the Obvious

Tuesday, December 19th, 2017

Article source: ConstructConnect

Construction’s interaction with high-tech is much more than the obvious.

2017-12-11-Construction-and-Technology-Graphic

Yes, there are the products (e.g., smart phones) and the processes (e.g., BIM) that factor in, but there is also a wide range of economic issues to consider as well.
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U.S. Put-in-Place Construction Spending Forecasts – Heading Into Winter 2017

Wednesday, December 13th, 2017

Article source: ConstructConnect

ConstructConnect is known for its ‘starts’ statistics and forecasts. Twice per year, however, − in early summer and late fall − ConstructConnect also calculates and publishes ‘put-in-place’ construction spending projections.

2017-12-04-US-Economy-Put-in-Place-Graphic

It helps that the ‘starts’ numbers are leading indicators for the PIP figures.

The history of PIP capital spending is compiled and published by the Census Bureau. A thorough explanation of the differences between ‘starts’ and ‘put-in-place’ is provided at the end of this article.

ConstructConnect is now estimating that ‘grand total’ U.S. put-in-place construction spending in 2017, expressed in ‘current’-dollar terms (i.e., not adjusted for inflation), will be $1.233 trillion.
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Springy Bounce in ConstructConnect’s March Starts, +18%

Wednesday, April 19th, 2017

Article source: ConstructConnect

ConstructConnect announced today that March construction starts, excluding residential activity, were +17.8 versus February. The long-term February-to-March advance, due to seasonality, has been only +2.5%. It’s usually not until April that more accommodating weather causes a big lift in volume of about +12.0%. Spring has apparently come early for groundbreakings this year.

2017-04-18-US-Nonresidential-Construction-Starts-Mar-2017
March 2017 versus what was an exceptionally buoyant March 2016 did not fare as well, -5.9%. And year-to-date starts (Q1 2017) have been -5.1% versus January-to-March of last year.


The starts figures throughout this report are not seasonally adjusted (NSA). Nor are they altered for inflation. They are expressed in what are termed ‘current’ as opposed to ‘constant’ dollars.

‘Nonresidential building’ plus ‘engineering/civil’ work accounts for a considerably larger share of total construction than residential activity. The former’s combined proportion of total put-in-place construction in the Census Bureau’s February report was 60%; the latter’s was 40%.

ConstructConnect’s construction starts are leading indicators for the Census Bureau’s capital investment or put-in-place series. Also, the reporting period for starts (i.e., March 2017) is one month ahead of the reporting period for the investment series (i.e., February 2017.)

View this information as an infographic.
(more…)

Nonresidential Construction Starts Trend Graphs – June 2016

Saturday, July 16th, 2016

Article source: ConstructConnect

Nonresidential Construction Starts Trend Graphs – June 2016 – ConstructConnect.com

Below are six graphs recording 12-month moving averages of ConstructConnect ’s nonresidential construction starts.

When the value of the current month is higher than for the same month a year ago, the line will turn up; when lower, it will dip.

String a couple of similar positive or negative directional changes together over several months and one has a trend.
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Fascinating Statistics (for Canada, Saudi Arabia and Others) From the Latest U.S. Foreign Trade Report

Thursday, September 10th, 2015

Article source: CMDGroup

This Economy at a Glance examines the most interesting and surprising data from the latest U.S. foreign trade report.

(1) U.S. Oil Imports: Due to the rapid emergence of a domestic hydraulic fracturing industry, plus efficiency improvements and conservation-minded consumer behavior, there is nothing like the former U.S. energy-dependency with the rest of the world.

The steep drop in the global price of oil from a year ago, combined with some extreme exchange rate fluctuations, have rendered the dollar figures on U.S. energy trade confusing.

However, ‘Exhibit 17a’, in July’s publication, released jointly by the Census Bureau and the Bureau of Economic Analysis (BEA), presents the data in ‘barrels’.

‘Barrels’ as a volume measurement carry the same constant-valued connotation as ‘units’ for both housing starts and motor vehicle sales and ‘square footage’ for construction activity.

Year to date, through July of this year, Canada − by a considerable margin − accounted for the largest proportion of U.S. crude oil imports (41.2%). (Keep in mind that this has been without a go-ahead for the Keystone XL pipeline expansion.)
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