Article source: ConstructConnect

Estimates of U.S. ‘real’ (i.e., after inflation) gross domestic product (GDP) growth for this year have generally been revised down recently, by well-known forecasting agencies, from a range between +6% and +7% to a ‘cooler’ +5%. Supply shortages have cut into output levels in many industrial sectors. And bad news about coronavirus variants is putting a damper on re-opening efforts.

The seven-day average coronavirus count in the U.S. is presently 120,000. Delta and Omicron have raised infections from reasonably low levels in the summer to a point where they are now half what they were at their peak in January, at the beginning of this year. That’s super discouraging. We’d all like to put this terrible period of anxiety behind us.

By the way, on a per capita basis, coronavirus cases are about three times greater in the U.S. than they are in Canada. (In the United Kingdom, the case count has now soared as high as it has ever been.)

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Article source: ConstructConnect

The DJI, S&P 500, NASDAQ and TSX have been setting new record highs in each successive month on a regular basis since early days in the pandemic. Nor did November fail to deliver success on that score once again. In the latest month, new peaks were established by the four major indices.

But towards the end of November, things took a different turn. The upward pressure on interest rates from rapid inflation is one concern that is capturing investors’ attention. Perhaps having even more of a negative impact, however, is the upsurge in coronavirus cases caused by the Delta variant. Plus, there’s the uncertainty over how spreadable and injurious to health will be the Omicron variant.

At the least, the coronavirus is making clear it won’t be easily shoved off the stage or relegated to the chorus. In different iterations, it’s going to keep demanding time in the spotlight. Worry over how this may sideline recovery has made investors wary.

By the end of November, the DJI’s closing value was -5.7% versus its earlier high. The S&P 500 was -3.7%; NASDAQ, -4.2%; and the Toronto Stock Exchange, -5.2%.

More telling, though, have been the month-to-month changes. Table 2 and Graph 4 show results for 14 indices from around the world. Only two of the 14 indices pulled off climbs from October 29th to November 30th, the Shanghai Composite (+0.5%) and NASDAQ (+0.3%).

The index with the worst record month to month in November was Hong Kong’s Hang Seng, -7.5%.

Setting aside the short-term gloom, NASDAQ continues to lead the world in year-over-year gain, at +27.4%, but it’s being closely chased by the iShares pre-emerging markets index, +26.8%, and by the S&P 500, +26.1%.

Next in line for y/y jumps are the Russell 2000, +20.8%, and the TSX, +20.2%.

Up by a fifth, also, is STOXX Europe, +19.3%, although neither the German DAX 30 nor London’s FTSE are doing as well, +13.6% and +12.7% respectively.

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Article source: ConstructConnect

According to the latest Employment Situation Report issued by the Bureau of Labor Statistics (BLS), the total number of jobs in the U.S. increased by +210,000 in November.

Frankly, +210,000 is a disappointing figure. Canada’s change in employment in November wasn’t much lower, at +154,000 jobs. And the size of Canada’s labor force is much smaller.

Furthermore, while Canada has recovered all the drop in its total employment level that transpired from February to April of last year, when the initial flare-up of COVID-19 led to a near economy-wide closure, the U.S. has clawed back just 82.2% of its Spring 2020 plunge.

Canada’s jobs ‘claw-back’ ratio of 106.2% means the nation has gone beyond restoring lost employment and is now on a path of extra jobs creation.

Perhaps the biggest difference between the two economies lies in public sector employment. The level of total government-tied jobs in Canada is now higher than before the pandemic.

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Article source: ConstructConnect

In the Spring and Summer of this year, a huge gap opened between construction bid prices that were staying low on a year-over-year basis and material input costs, also y/y, that were soaring into the stratosphere.

Graph 1 shows the comparisons. The top curve records the average gain for two PPI series measuring construction material cost hikes. The bottom curve captures bid prices. The PPI code numbers are WPUIP231000, WPUSI012011 and WPUFD43.

Over the past several months, there’s been some downward adjustment in the materials cost structure. The top curve in Graph 1 descended from its peak, but then it did jog back upwards slightly in October. The bottom curve for bid prices has been increasing, with an especially big jump in the latest month, to +12.3% y/y.

Forestry products is where the first big and outrageous escalation in costs began earlier this year, with softwood lumber prices in May being +161% year over year.

There’s been a sigh of relief at seeing the cost of softwood lumber turn -19.5% y/y in October and -25.3% during the past three months.

This doesn’t mean there will be a corresponding financial break for purchasers of new homes. U.S. sawmills supply only about 70% of the product needed for American homebuilding. Imports from Canada make up almost all the rest and the average tariff on shipments from north of the border has just been doubled from a rounded 9% to a rounded 18%.

Also, not all wood products have seen large price drops. Hardwood lumber and millwork, appearing as line items in Table 2 at the end of this article, are +45.6% y/y and +14.4% y/y respectively.

Also, even with their price retreats, softwood lumber, plywood and particle board/oriented strandboard are currently at levels higher than at any other time this century