CMD announced today that January’s level of U.S. construction starts, excluding residential work, was $24.7 billion, an increase of 9.8% versus December. The nearly double-digit percentage increase was noteworthy since there is usually (i.e., average over 10-years-plus) a December-to-January decline, due to seasonality, of 8.5%.
Compared with January of 2015, the latest month’s starts level was +12.9%. Relative to average non-residential starts in January over the preceding five years, 2011 to 2015, the gain was +18.6%.
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.
‘Non-residential 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 December report was 63%; the latter’s was 37%. (more…)
My favorite meal when traveling on business or pleasure used to be breakfast in the hotel where I was staying. In the ‘old days’, a morning repast was almost invariably cheap, plentiful and delicious.
Last summer, I took my family to Chicago for some wonderful sightseeing. We live in Toronto. (Our oldest child has moved out of the house and he and his girlfriend undertake their own travel adventures.)
The price of the breakfast buffet where we were registered downtown was $32.50 USD. For the four of us, that would have come to $130.00 USD.
Such a charge would have been steep enough on its own. Factor in the value of the Canadian dollar at the time, and the price was going to be $160.00 CAD.
Consider the further devaluation in the loonie since then, and the pain rises to $185.00 CAD.
That’s serious coinage. It’s nearly enough to rent a tuxedo, which I’ve always considered to be an excursion into luxury land. (more…)
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.
The cost of construction is largely determined by labor and material inputs.
The previous Economy at a Glance studied U.S. year-over-year average hourly wages in construction relative to all private sector jobs and other major industries.
Expanding the analysis somewhat, the Bureau of Labor Statistics (BLS), in its monthly Employment Situation report, publishes four series on wage rates. Table B3 records average hourly and average weekly earnings for all employees in a range of industries. Table B8 has similar average hourly and weekly earnings information, but only for production and non-supervisory personnel.
For construction, the December 2015 year-over-year results were +2.9% (average hourly) and +4.2% (average weekly) from Table B3 and +2.7% (average hourly) and +3.3% (average weekly) from Table B8.
To summarize, the earnings results for construction ranged from +2.7% to +4.2% annually.
The accompanying table records the 10 largest construction project starts in the U.S. in December 2015.
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 job-site 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. (more…)
In the early going of 2016, the headline story has been the heightened level of anxiety displayed by stock market investors. Versus 2015’s year-end closings, both the Dow Jones Industrials index and the S&P 500 are -6.0%; NASDAQ is -7.8%; and the Toronto Stock Exchange, -5.2%.
Compared with their most recent highs, the DJI is -10.7%; the S&P 500, -10.0%; NASDAQ, -11.8%; and the Toronto Stock Exchange (TSX), -20.5%. The TSX has given its passengers a particularly bumpy ride. It has fallen into ‘bear’ territory (i.e., a decline of 20% or more.)
The main widely-cited reason for the sell-offs has been an expectation of weaker growth in China. There are two highly-charged ways in which such a pull-back has unfortunate repercussions for the U.S. and Canadian economies. First, the value of the yuan is being lowered, to make the price of Chinese exports more competitive in world markets.
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.
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.