Article source: ConstructConnect

October Starts Moved Sideways

ConstructConnect announced today that the latest month’s volume of construction starts, excluding residential work, was $25.9 billion, nearly a match (-0.4%) for prior-month September’s $26.0 billion (originally reported as $24.3 billion). October’s year-to-date figure, however, remained down significantly compared with the first ten months of last year, -27.8%.

Given that October starts usually feature a mild seasonal decline, due to the arrival of cooler weather, it’s good news that the latest month stayed almost level (-0.4%) with September. But it’s important to record that October 2020 was way down compared with October 2019, -41.5%.

Often, in 2020, the individual monthly figures when compared with the same month of 2019 have fallen short with respect to mega proj- ects of a billion dollars of more each. 2019 was an exceptional year for ultra-large project initiations. (There were 35 of them, adding to $79 billion and 15% of total nonresidential starts.) May and August 2019 were the peak months for ‘megas’.
(more…)

Article source: ConstructConnect

• Inflation Down for the Count?
• Some of the Buffers Against Inflation are Weakening or Disappearing

Inflation Down for the Count?

The year-over-year change in consumer prices in the U.S. in October was +1.2%, according to the Bureau of Labor Statistics (BLS). In Canada, the latest month’s price climb was only +0.7% y/y, as calculated by Statistics Canada.

October’s y/y ‘core’ rates of inflation, which leave out volatile energy and food components, were +1.6% and +0.8% south and north of the border respectively.

The current rates of inflation in both countries are tepid and no cause for alarm. In fact, it’s been many years since inflation has been the terrifying prospect it once was.

A little inflation, of say around +2.0% y/y, is a good thing. It greases the wheels of economic activity, making loans easier to pay down for both business and individual borrowers. Current price hikes aren’t rising to even +2.0% y/y.

There have been background factors working to suppress inflation, however, and some of those buffers are weakening or disappearing. The next section will elaborate on some of those changes. (more…)

Article source: ConstructConnect

October’s Employment Situation report from the Bureau of Labor Statistics (BLS) records a +638,000 pickup in U.S. total employment, not much different from September’s increase of +672,000.

The U.S. seasonally adjusted (SA) unemployment rate in the latest period improved to 6.9% from 7.9% in the prior period. The not seasonally adjusted (NSA) unemployment rate showed similar movement, downshifting to 6.6% from 7.7%.

Versus the huge drop in total employment from February to April of this year, the U.S. economy has now managed a jobs recovery ratio of 50.9%. That’s progress, but it certainly doesn’t warrant being called wonderful. At least with respect to the labor market, a V-shaped recovery has not materialized.

Total U.S. employment year over year presently stands at -6.1%, comprised of services at -6.7%; manufacturing, -4.5%; and construction, -2.6%.

The construction jobs jump in October was a noteworthy +84,000, leaning more towards to nonresidential work than residential. This runs counter to the expectation that it will be housing starts that will provide sustenance to the industry over the next little while.

Construction’s NSA unemployment rate is currently 6.8%, better than the previous month’s 7.1%, but considerably elevated from its year-ago level of 4.0%.

Earnings in construction are still notably lagging earnings for all jobs. Whereas the all-jobs compensation gains in October were +4.5% y/y hourly and +5.7% weekly, hard-hat workers made only +2.8% hourly and +1.5% weekly.

(more…)

Article source: ConstructConnect

U.S. gross domestic product (GDP) in Q3 2020 increased by about 1/3 after falling to about the same degree in Q2, but it is still 5% under what it would have been without the onset of the coronavirus crisis.

There are two jobs numbers that will tell us when the economy has returned to nearly robust health:

• Versus the huge drop in employment between February and April, the number of jobs recovered to date has yielded a decent claw-back ratio (50%), but it needs to rise a lot higher. Not until the jobs-recovery ratio approaches 90% will there be strong confidence that the economy is firmly back on track.

• The weekly initial jobless claims number is proving to be sticky. For more than 30 weeks, it has exceeded its peak level (just under 700,000) achieved in the 2008-2009 recession. Last week, it was close to 800,000. I’d like to see the figure drop to at least 400,000 … and 300,000 or lower would be that much better.

Everyone knows that consumer spending comprises 70% of U.S. gross domestic product (GDP). In turn, retail sales make up a little less than half of consumer spending. Monthly retail sales numbers say a great deal about what is going on both in society and in the economy.

Presently, Internet sales are ahead by one-quarter year over year, because of the surge in shopping from home that is taking place. This also explains why ‘bricks and mortar’ retail in shopping malls is so distressed.

(more…)

Article source: ConstructConnect

So Far, PIP Construction Not Too Alarming, But …

The headline numbers on U.S. put-in-place (PIP) construction spending, from the Census Bureau, continue to be somewhat reassuring ‒ or, at least, not too alarming.

In September, the total dollar volume of $1.414 trillion (seasonally adjusted and annualized) was +0.3% month to month, with residential at +2.7% and nonresidential, -1.6%.

On a year-over-year basis, September’s total PIP figure was +1.5%, with residential (+10.1%) pulling ahead and nonresidential (-4.4%) stepping back.

Residential PIP is holding up nicely; nonresidential, not so much. The former is 44% of the total, with the latter at 56%. The relationship is usually nearer to 40% versus 60%.

A closer look at the numbers, especially in the nonresidential sphere, is warranted.

(more…)