Article source: ConstructConnect

The construction sector is presently generating several big news stories. One relates to building material costs; another concerns infrastructure spending plans. But in this article, through standalone graphs, I’d like to show the boom that is currently underway in housing starts, evident more so in Canada, but also quite apparent in the United States.
In March, U.S. housing starts climbed above 1.7 million units seasonally adjusted and annualized (SAAR) for the first time since before the previous recession (i.e., the 2008-09 ‘global financial crisis’). Meanwhile, in Canada, housing starts have soared more than 50% above their long-term average (200,000 units) and 20% beyond their previous cyclical high point (277,000 units).
In March, Canadian new home starts skyrocketed to 335,000 units SAAR, according to CMHC. That’s a figure I doubt many analysts thought they would see any time soon, especially given that population growth through immigration has slowed to a crawl due to pandemic-related border-crossing closures.
Absent the inflow of individuals from afar, the housing booms in both the U.S. and Canada are being generated domestically. Working from home to combat COVID-19’s spread is inspiring a whole lot of people to want to upgrade the ambience of where they are now spending almost all their time.
Plus, bargain interest rates are hanging on ‘financing trees’ like bright shiny baubles to be grabbed before they disappear.
In the following 12 graphs, the text boxes will lead readers through a story that will hopefully be the first of many indicating much sturdier underpinnings for the U.S. and Canadian economies as we transition away from the health crisis and towards sunnier prospects.

(more…)

Article source: ConstructConnect
Global Stock Market Improvements Broadly Based, Finally

On the world economic stage, matters have been taking a turn for the better once again. Table 1 shows that for the first time since before the pandemic, all the major stock markets globally registered year-over-year index gains at the end of March.
For much of last year, only the North American indices managed to make headway. Presently, the increases are broadly based. Even the two exchanges with the poorest records, Hong Kong’s Hang Seng and London’s FTSE, are up by decent, if not outstanding amounts, +20.2% and +18.4% respectively.
Furthermore, NASDAQ has surrendered leadership status among all indices. The ‘small cap’ Russell 2000 index pulled off the biggest year-over-year jump at the end of this year’s Q1, +92.6%. NASDAQ was in second place, at +72.0%, but third, fourth and fifth spots were claimed by foreign indices: ‘iShares Emerging Markets, Asia’, +59.3%; ‘iShares Emerging Markets, Worldwide’, +56.3%; and Tokyo’s Nikkei 225, +54.2%.
The German DAX 30 has also done well, +51.0% y/y as of March 31st, keeping up with the S&P 500, +53.7%, and the DJI, +50.5%. In March, The German DAX 30 scored the highest month-to-month gain among the 14 indices, +8.9% (see Table 2).
Graph 1 illustrates how the NASDAQ index has flattened out of late, as investor attention has shifted mildly away from high-tech firms towards traditional cyclical winners, and companies that will benefit from the pick-up in world trade that is in its nascent stage.
Not to be overlooked, however, Graph 2 sets out the truly remarkable increases realized by the U.S. major indices since their last major troughs in February 2009. The DJI in the past dozen years has climbed +367%; the S&P 500, +441%; and NASDAQ, +861%.

Table 1

Article source: ConstructConnect
The most recent changes are set out in the tables and graphs below, for U.S. and Canada.

The data is based on price indices from the Bureau of Labor Statistics (through March) and from Statistics Canada (through February).

(more…)

Article source: ConstructConnect

This latest version of the mid-month Nuggets report, rather than proceeding in point form, discussing recent data releases, will be expository concerning some of the most important economic issues of the day.
Until last Thursday, April 15^th, whenever thoughts of a considerably cheerier economic outlook arose, there was a giant BUT that stood in the way. Weekly initial jobless claims as a leading indicator continued to be stuck in the stratosphere. How could one speak confidently of an upcoming surge in demand when the number of individuals seeking unemployment insurance for the first time remained higher than the peak level in the previous recession, 2008-2009 (see Graph 1).
Initial jobless claims were close to or well above 700,000 for a full year, after the coronavirus pandemic first lit into the economy in mid-March of last year. With last Thursday’s result, however, for the week ending April 10^th, the number finally showed the kind of improvement needed to put the past aside and begin to look encouragingly towards the future. It dropped by -193,000 to settle at 576,000, finally descending through the 600,000-benchmark. There’s legitimate hope that in short order it will break through 500,000, then 400,000, as well. (The month-to-month pickup in total U.S. employment in March exceeded a million jobs, including the revision to February’s originally reported number.)

(more…)

Article source: ConstructConnect

Tough Competing with ‘Normal’ but 3 Mega Projects Helped
ConstructConnect announced today that March 2021’s volume of construction starts, excluding residential work, was $32.2 billion, an increase of +60.1% versus February’s distressed level of only $20.1 billion.
Total nonresidential (NR) groundbreakings in the latest month received boosts from three mega-sized projects, an auto plant expansion in Tennessee and two big hospital jobs located in Ohio and California.
Leaving aside the exceptional weakness of total NR starts in the previous month (February), latest March’s starts volume failed to match year-ago March’s level, falling short by -7.9%.
Also, year to date starts through the first quarter of 2021 were off by one-fifth (-20.0%) relative to January-March 2020.
Keep in mind that Q1 of last year was mostly ‘normal’ with respect to a broad range of economic indicators, including ‘starts’. The truly harmful effects caused by the outbreak of coronavirus infections occurred from Spring 2020 on. Proceeding further into 2021, a ‘diminishing base (or denominator) effect’ will put a better polish on year-over-year comparisons.

The Starts vs PIP Relationship
‘Starts’ compile the total estimated dollar value and square footage of all projects on which ground is broken in any given month. They lead, by nine months to as much as two years, put-in-place (PIP) statistics which are analogous to work-in-progress payments as the building of structures proceeds to completion.
PIP numbers cover the ‘universe’ of construction, new plus all manner of renovation activity, with residential traditionally making up two-fifths of the total and nonresidential, three-fifths (i.e., the bigger portion). Presently, though, according to the Census Bureau’s February 2021 PIP report for total U.S., the mix has skewed more towards residential (47% of the total) and away from nonresidential (53%) than usual.
PIP numbers, being more spread out, have smaller peak-over-trough percent-change amplitudes than the ‘starts’ series. As an additional valuable service for clients and powered by its extensive ‘starts’ database, ConstructConnect, in partnership with Oxford Economics, a world-leader in econometric modeling building, has developed put-in-place construction statistics by types of structure for U.S. states, cities and counties, ‘actuals’ and forecasts.

(more…)

Article source: ConstructConnect

Permits Still Exceeding Starts

In the U.S., new home building, which seemed set to keep surging, has lost some of its momentum in the last two months.

In Canada in February, there was only a minor hesitancy in the headlong rush of residential groundbreakings, due to Toronto ‘playing it cool’.

Let’s look at the U.S. first. After reaching a peak level of housing starts of 1.670 million units in December of last year, the figures have dropped to 1.584 and 1.421 in the latest two months respectively.

The bias of work still leans towards single-family starts, which in February were -8.5% month to month, but +0.6% year over year. Multi-family starts lost support, declining -15.8% m/m and -28.5% y/y.

Regionally, only the West managed percentage-change increases in housing starts both m/m and y/y in February, +17.6% and +15.8%. The Northeast was -39.5% m/m and -2.5% y/y; the Midwest, -34.9% m/m and -29.9% y/y; and the South, -9.7% m/m and -16.6% y/y.

To date in 2021, the South has accounted for half (50.8%) of all housing starts nationally. The West has claimed a share a little bigger than a quarter (27.1%). The other two regions have approximately split the remainder (10.5% for the Northeast and 11.6% for the Midwest).

One shouldn’t become too discouraged by February’s pullback in total U.S. housing starts. Residential permits, which are a leading indicator for starts, have continued strong. In the latest month, they were 1.682 million units, +17.0% y/y (although they were -10.8% m/m).

Over the past 12 months, the number of permits issued in units has exceeded the number of starts, also measured in units, by 100,000. (more…)

Article source: ConstructConnect

ConstructConnect-OE’s GDP Projections on the Mark
Government statistical agencies in both the U.S. and Canada have recently been putting the finishing touches to their estimates of gross domestic product (GDP) growth (or, rather, lack thereof) last year.
The most recent calculation of the U.S. GDP contraction in full year 2020 versus full year 2019 places it at -3.5%. During the quarters of last year, Q2 and Q3 displayed the wildest swings, -31.4% q/q annualized, followed by +33.4% also q/q annualized. The fourth quarter closed out the year with a gain of +4.3%, q/q annualized.
‘Annualized’ means taking the quarter-to-quarter change and projecting it out (or, in other words, assuming it holds true) over a full 12-month period. There’s a compounding aspect, but it generally yields a result not much different from multiplying by four.

(more…)