Article source: ConstructConnect

Record ‘Goods’ Trade Deficit & Deterioration in ‘Services’ Surplus

In discussions about gross domestic product (GDP), foreign trade receives the attention it deserves in Canada, but it’s undervalued in the U.S. The reason undoubtedly has to do with the shares of GDP contributed by exports in the two countries.

In Canada, total exports as a share of GDP in 2019 (i.e., the last full year before the coronavirus lull) were 32%, or nearly one-third, with ‘goods’ at 26% and ‘services’ at 6%. In the U.S. in 2019, the export slice of GDP was considerably lower, 12%, with ‘goods’ at 8% and ‘services’ at 4%. But 12% of GDP is nothing to scoff at; it’s a formidable chunk, nonetheless.

Furthermore, one of America’s biggest problems at present concerns supply shortages which, in turn, are often tied to the logistical difficulties of moving cargo in and out of ports.

The U.S. has been running a foreign trade deficit for as far back as anyone can remember. Specifically, there’s been a deficit in ‘goods’ trade (a.k.a., the merchandise trade balance) that has been much larger than the surplus in ‘services’ trade.

The total or net deficit became extremely large in the several years preceding the 2008-09 recession, then it quietened down for about ten years. In 2021, however, it has roared back.

(more…)

Article source: ConstructConnect

An Excess of U.S. Retail Demand

Consumer spending is about 70% of gross domestic product (GDP) in the U.S. and 55% in Canada. (The lower percentage in Canada is due to foreign trade being relatively more prominent in overall economic activity north of the border.)

Retail sales, which are widely reported by the media, are an important part of consumer spending (between 40% and 45%), although they are exceeded by spending on services, which are more varied and not quite as easy to package in a summary.

Hence, considerable attention is given to the health of retail sales, with the tie-in to GDP growth usually cited.

After the plunge in U.S. retail sales in the Spring of last year, they recovered quickly. Then they went the proverbial ‘extra mile’. Graph 1 shows that the current level of retail sales isn’t just what might be expected if the pattern from 2009 through 2019 were extended outwards. It’s considerably more.

Yes, there’s been a make-up of the ground lost during the big dip last year, but there’s also been notable additional strength. Several factors have played contributing roles.

(more…)

Article source: ConstructConnect

Concerning the cost of doing business, a lot of attention has been focused lately on sharply rising material input prices. But compensation rates haven’t just been sitting idly by, quietly twiddling their thumbs, either.

There are numerous sources of information on the wages paid to workers in the U.S. and Canada. It would seem logical, though, to turn first to the data provided by the Bureau of Labor Statistics (BLS) and Statistics Canada in their monthly Employment Situation and Labour Force Survey reports respectively. Being included along with the latest jobs numbers means they come, as near as can be, with an ‘official’ stamp.

Tables 1 and 2 below are derived from Table B-8 of September’s BLS Employment Situation Report. The hourly and weekly wage rates are for ‘production and nonsupervisory’ workers. In other words, bosses are excluded. Table 3 below condenses and summarizes material appearing in Table 11 of Statistics Canada’s September Labour Force Survey. In addition to pay hikes, it provides insight into union versus non-union and full-time versus part-time earnings.

(more…)

Article source: ConstructConnect

This isn’t a hard point to make. A great deal of emphasis in coming years will be placed on de-carbonization. A full court shift to electrification is viewed by many as a primary means to achieve desired and commendable levels of carbon reduction. What is not being presented or discussed thoroughly, though, is how costly this will be. Nor will the shift to greater usage of renewable electric power be the only factor pushing up day-to-day living and business expenses. There are a host of others including investments in cyber security; commitments to employee compliance courses; deeper workplace cleaning efforts; and accelerating adoption of high tech.

Rising inflation, reflected by consumer prices that are climbing quickly, and brought on by material shortages, supply chain interruptions (particularly at West Coast ports), commodity price advances and wage hikes, is one thing. Set aside the inflation issue for a second. There’s a whole separate topic to be covered concerning other measures that are about to make the post-pandemic world an expensive place in which to live and do business. I’ll have more to say on this subject when ConstructConnect hosts its next 3-Economists Webinar on November 3rd.

(more…)

Article source: ConstructConnect

There are two big stories from the September Jobs reports just released for the U.S. and Canada.

For the U.S., total employment in the latest month rose by only +194,000 jobs, a disappointing figure resulting from re-emergent coronavirus cases due to the virulence of the Delta variant. As vaccination coverage continues to widen, this negative influence will gradually dissipate, and analysts are hopeful that October will see a better jobs creation performance.

But for the U.S. construction sector, the truly eye-catching numbers from September reside in the compensation tables. According to Table B3, which includes supervisory personnel, construction worker weekly earnings were +7.2% year over year.
From Table B8, which is strictly for production workers (i.e., it excludes bosses), construction worker earnings in the latest month were +10.2% y/y. That’s a double-digit percentage increase for the first time in the data series going back to at least January 2000.

(more…)

Article source: ConstructConnect

U.S. Housing Starts Stay Elevated

Construction activity in the U.S. is currently being sustained almost exclusively by residential work. Year to date through August, the put-in-place capital spending figures from the Census Bureau show the residential dollar volume to be +25.8% compared with Jan-Aug 2020 and nonresidential to be -6.7%. The grand total is +7.0%.
The usual proportions of residential to nonresidential in the total PIP numbers are 40% to 60%. Presently, residential has increased its prominence to claim an almost equal share, at 49.5%, to nonresidential construction’s 50.5%.
Among nonresidential construction’s 16 type-of-structure sub-categories, only one has managed a year-to-date increase in spending, ‘sewage and waste disposal’, +3.6%. Furthermore, that gain is tied to the burst of new single-family homebuilding that is taking place.
Housing starts in the U.S., as the average of the monthly seasonally adjusted and annualized (SAAR) figures through August of this year, have been ahead by one-fifth (+20.3%) versus the first eight months of last year.
The monthly average of single-family starts (in units) has been +23.9%, setting a pace nearly twice as fast as multi-family starts, +12.6%.
(more…)