Article source: ConstructConnect

The following are economic ‘nuggets’ gleaned from the latest
public and private sector data releases.

(1) Exceptionally Low Unemployment Rates, U.S. and Canada

Rightfully so, a big fuss is being made over how low the current (December 2019) U.S. unemployment rate is, at just 3.5%. The 3.5% level is a seasonally adjusted (SA) figure. On a not seasonally adjusted (NSA) basis, the U.S. jobless rate is even lower, at a mere 3.4%. What is being overlooked, however, is Canada’s remarkable performance on this front as well. The Canadian unemployment rate, when it is calculated according to the same methodology as in the U.S., is also minuscule. At just 4.2%, it’s less than a percentage point above America’s figure. (The name adopted by Statistics Canada for its NSA U.S.-equivalent unemployment rate is ‘R3’.)

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Article source: ConstructConnect

A Dampening of Euphoria May Be Warranted

Euphoria concerning the U.S. economy, as demonstrated by record-setting stock market indices, won’t be dampened much by the just-released and somewhat tame Employment Situation report from the Bureau of Labor Statistics. The total number of American jobs in December rose by a lukewarm +145,000. Also, November’s jobs total was revised downwards slightly, by -14,000.

At the same time, though, the seasonally adjusted (SA) unemployment rate stayed constant and exceedingly tight at 3.5%.

Nevertheless, the monthly average climb in U.S. employment in full-year 2019 was off by one-fifth compared with full-year 2018, +176,000 as opposed to +223,000.

Graphs 1 and 2 have been derived from the Job Openings and Labor Turnover Survey (JOLTS). Graph 1 highlights that while total job ‘openings’ in the U.S. economy, expressed as both a level and a rate, remain quite elevated, they have been easing off a bit over the past couple of years. Also, ‘hires’, as captured in Graph 2, appear to have been moving sideways more than upwards.

Consumer Calling the Shots in New Employment

A historically low unemployment rate will render jobs advances, as seen so far in this economic upturn, harder to achieve. In turn, slower employment pickups will lead to a deceleration in consumer spending growth.

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Article source: ConstructConnect

ConstructConnect expects growth of the U.S. economy to slow in 2020 and 2021, before picking up steam once again in 2022. Total construction activity, as measured by put-in-place capital spending, will be negatively affected to some degree, although it will receive support from homebuilding work that is generating ‘new shoots’ and mega projects that are underway and planned in the industrial and heavy engineering type-of-structure categories.

ConstructConnect calculates and publishes ‘starts’ statistics. But this article features put-in-place (PIP) numbers that come from the Census Bureau. ‘Starts’ focus on projects which break ground in any given month. The PIP approach, however, is analogous to monitoring progress payments as projects proceed over several months or even years.

PIP numbers follow behind, or lag, up-front ‘starts’ statistics. They are less volatile than ‘starts’, with smaller amplitudes between peaks and troughs.

Best Trend Line ‘Fits’ Are in Engineering Construction

ConstructConnect’s PIP forecasts are set out in Graphs 1 through 20. Each graph shows ‘actuals’ from the Census Bureau through 2019 (although 2019 is an estimate based on year-to-date ‘actuals’ through October) and projections for 2020-2022 made by ConstructConnect.

Each graph also contains an Excel-generated trend line out to 2022. In many instances, the trend line offers little more than a loose visual guideline to the pattern of the PIP numbers. But in some cases, the trend line captures the path of the ‘actuals’ and forecasts to a striking degree.

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