Article source: ConstructConnect

Fighting through the headwinds of more restrictive interest rates, the U.S. economy managed another good month of jobs creation in December, +223,000 according to the BLS. It should be noted, however, that the month-to-month increase in nation-wide employment has been gradually diminishing over the past six months.

In fact, as is made clear in Graph 1, with the exception of July’s surge in hiring, month-to-month employment gains have been shrinking since early in 2022. The monthly average of new jobs creation throughout 2022 was off by a third compared with 2021, +375,000 versus +562,000.

The U.S. seasonally adjusted (SA) unemployment rate in December was 3.5%, down a smidge from 3.6% in November. The not seasonally adjusted (NSA) unemployment rate in the latest month was a mere 3.3%, also tightening a tad from the previous month’s figure, 3.4%.

(more…)

Article source: ConstructConnect

Given the increases in mortgage rates that have transpired, significant slides in homebuilding activity are being taken for granted in the U.S. and Canada. Based on the latest housing starts statistics, this is already underway and clearly apparent in the former more than in the latter. See Graph 8 below, where Canadian housing starts have been moving mostly sideways throughout this year, while U.S. starts have been exhibiting significant declines month to month.

The monthly seasonally adjusted and annualized (SAAR) figure on housing starts in the U.S. has dipped below 1.5 million units in four of the last five months. Prior to this past July, they were above 1.5 million units in 16 straight months, topping out at 1.805 million units in April 2022.

A cause of more concern than the ‘starts’ numbers, however, is how residential building permits have been performing. The permits data series usually provides a couple of months forward glimpse into where starts will be heading. The permits numbers have turned nasty.

Graph 1 highlights the extent of the coming damage. Total U.S. residential building permits have been cratering for most of 2022.

(more…)

Article source: ConstructConnect

Canada has become much more than a natural resource-based economy.

Nevertheless, it’s a huge error in appreciation to underestimate and undervalue how much the raw materials sector means to the nation, its industry, and its people.

The construction sector knows. It’s well aware that many of the largest projects ever undertaken have originated in remote sites related to harnessing, extracting, or moving natural advantages.

Furthermore, there’s a significant foreign trade tie-in that is crying to be better understood.

Coincident with the push to net zero emissions (NZE) by mid-century, the U.S. and Canada will be entering a new era of mega project construction. The U.S. has already embarked on this path. Canada will be following shortly.

Many of the largest projects either underway or about to be built will feature new or expanded facilities to replace imports (e.g., chipmaking and battery plants) or facilitate exports (e.g., LNG terminals).

The total dollar volume of Canada’s goods exports so far this year are up by close to +20% compared with January-October of last year. Table 1 shows year-to-date rankings and dollar-volume percentage changes for 26 key product categories. Some of the increases are astonishing.
(more…)

Article source: ConstructConnect

As the U.S. added 263,000 jobs in November, Canada stood by and watched in awe. The change in total employment north of the border in the latest month, according to Statistics Canada, was only +10,000 jobs.

On a little cheerier note for Canada, full-time employment in November rose by +51,000 jobs, although part-time staffing fell by -41,000. Full-time work is higher paying and more stable and is therefore judged to be of higher ‘quality’ when it comes to helping out the economy.

Canada’s headline, and seasonally adjusted (SA), unemployment rate is now 5.1%, down slightly from October’s 5.2%. The nation’s U rate not seasonally adjusted (NSA) is 4.6%. The NSA U rate calculated according to the same stringent standards as in the U.S., with respect to who is really truly trying their hardest to find work, is 3.8%. The 3.8% figure is not far off the 3.4% number south of the border.

November wasn’t a good month for hiring in the construction sector, however. The jobs loss in construction in the latest month, -25,000, exactly matched the gain in the prior month, +25,000.

The overall decline in construction employment in November occurred mainly in Alberta (-13,000 jobs) and British Columbia (-9,200).

It shouldn’t come as much of a surprise that construction employment is flattening. In a separate report on the cost of construction, Statistics Canada is laying out some truly stunning increases, which must be causing some owners to waiver when considering their capital spending plans.
(more…)

Article source: ConstructConnect

A Change has Come Over Stock Markets

Earlier this year, a terrible gloom descended on stock markets both at home and internationally. Fears of what rising interest rates would do to economies near and far sent investors hurrying to divest their holdings. The exiting was especially brutal from March through September.

But in the last two months there’s been a reversal. As of November’s closing, the DJI had regained 72% of its big drop. The TSX had reclaimed 59% and the S&P 500, 44%. Only NASDAQ’s revival of 25% has lacked much conviction.

The Bank of Canada has just increased its policy-setting overnight rate by 50 basis points (where 100 basis points = 1.00%), to 4.25%. It has indicated, however, that it may stand pat with respect to further rate hikes for the foreseeable future until it learns more about how events are shaking out.

(more…)

Article source: ConstructConnect

Much of the world may be taking a break as yearend approaches, but that doesn’t mean the economy is kicking back with eggnog and gingerbread cookies. Public and private sector data releases are pouring forth regardless and here are some of the nuggets to be gleaned.

(1) One indicator with a strong record for reliability concerning the health of the U.S. labor market is the weekly initial jobless claims figure released by the Bureau of Labor Statistics (BLS). A number above 300,000 generally correlates with high unemployment and recession. As the figure descends below 300,000, however, the labor market is tightening. Down around 200,000, the unemployment rate will be about as low as it ever manages to go. That’s where we are now and where we have been for quite a while. At times, during the last several months, the initial jobless claims number has threatened to move significantly higher. For example, it rose to 261,000 in mid-July of this year. But for the latest reported week, the one ending December 10^th, it was notably down again, at only 211,000.

(2) The U.S. not-seasonally-adjusted (NSA) unemployment rate is just 3.4%. The Canadian comparable figure is similarly minimal, 3.8%. This is despite the federal funds rate of the Federal Reserve having been lifted into a range of 4.00% to 4.25% and the overnight rate managed by the Bank of Canada moving up to 4.25%. Both central banks have made no secret of the fact they want to slow their home economies to rein in price inflation. The braking actions have dimmed business and consumer confidence, but they have not, as yet, knocked the stuffing out of either economy.
(more…)

Article source: ConstructConnect

Once again, there was little wrong with the U.S. labor market picture in the just released monthly update from the Bureau of Labor Statistics (BLS). November’s jobs creation figure was +263,000, not far off what it’s been in each of the three preceding months.

From August through November, the monthly increase in the U.S. total jobs count has ranged between +250,000 and +300,000, a tight and quite healthy band.

The dreaded recession, at least at the tail end of 2022, is still at bay as far as the overall labor market is concerned, although there are certainly well-publicized instances (e.g., Twitter) of new management taking action that has led to significant layoffs.

(more…)

Article source: ConstructConnect

The current year, 2022, is shaping up to be the best ever for mega project initiations. ‘Megas’ are projects carrying an estimated construction value of a billion dollars or more each. For many of these projects, there’s also a machinery and equipment component in the total capital spending or investment figure that is often roughly equivalent to the construction cost.

In ConstructConnect’s ‘starts’ statistics, through October of this year, there are 25 mega project starts for a combined dollar value of $83.8 billion. 2019 was the previous best period, when there were 35 megas through the full year, adding to $79.1 billion.

A key factor inspiring owners to proceed with many of the nation’s largest construction projects is the opportunity for export sales. This is particularly true in the sphere of natural resources. To go a step further, while those opportunities exist in some other areas, such as agriculture (with the building of immense soybean processing plants, as just one example), they have especially come to the fore in the field of energy products.

Due to hydraulic fracturing, the U.S. is no longer as dependent on the rest of the world for oil and natural gas as it once way. In fact, the U.S. is back in the game of exporting energy products.

Deprived of Russian energy supplies, as a fallout of the Ukraine conflict, Europe is desperate for oil and gas from alternative suppliers. A huge differential in price has opened between natural gas extracted in North America, at around $6 USD per mcf (or MMBtu), and deliveries made to Europe, or Asia for that matter, beginning at $30 USD/mcf and going skyward from there.

(more…)

Article source: ConstructConnect

The U.S. and Canadian central banks are determined to slow their economies enough through interest rate hikes to put a choke hold on inflation (which, by the way, is showing signs of relenting in both countries). The ‘slowing of the economy’ part of the plan is worrisome because it might bring on recessions of who knows what duration or magnitude.

Since the beachheads of recession north and south of the border will almost certainly be established in residential real estate markets, this edition of the Nuggets report will concentrate nearly exclusively on the latest home building statistics for the U.S. and Canada.

(more…)

Article source: ConstructConnect

ConstructConnect’s annual construction starts statistics for ‘bricks and mortar’ retail sites are set out in Graph 1. The history goes back to 2005 and the forecast portion of the chart extends to 2026.

Under intense pressure from a rapid expansion of Internet online selling sites, physical retail construction starts contracted dramatically from 2016 through 2020. Then something interesting happened.

In 2020, with the arrival on the scene of the coronavirus, and most consumers following stay-at-home directives, there was a proliferation in purchases sought out and finalized by digital means. (As a sidebar, non-store retail sales have now tripled as a share of total retail over the past 20 years, going from 6% to 18%.)

But 2020 was also the year in which bricks and mortar retail construction starts stopped falling. In 2021, they picked up slightly and in 2022, they are looking to provide another incremental increase.

(more…)