Article source: ConstructConnect

Inflation, Stock Markets and Interest Rates

The U.S. ‘all-items’ Consumer Price Index (CPI) in April was +2.0% year over year. The ‘core’ rate of inflation, which omits mainly food and energy items that display notable price volatility, was +2.1% y/y. It seems that inflation, at least for now, has become untethered from what is transpiring in the economy at large. A highly-charged jobs market and solid gross domestic product (GDP) growth aren’t causing the usual (i.e., pre-recession) ascending price effect.

Technological advances by leading firms in many industries have helped to keep price increases retrained. Examples include Amazon in retail; Uber in ride-sharing; and iPhones in photography.

The big economic issue at present is the escalation of America’s trade dispute with China. The major stock market indices, which were recovering nicely from setbacks in December, have lately been wobbling once again. Investors had the impression that a trade deal was imminent.

The Federal Reserve has come under criticism for paying more attention to the stock markets than the ‘real economy’ when setting its interest rate policy. Since inflation has been taken out of the equation, it will be interesting to observe what will prompt the next Fed interest rate move.

With the foregoing as backdrop, there are also the following nuggets to be gleaned from the latest public and private agency data releases. The soil is fertile and the crop abundant.

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Article source: ConstructConnect

President Trump will be of two minds when he sees the latest labor market numbers from the Bureau of Labor Statistics (BLS). April’s Employment Situation report records another month of exceptional jobs growth, +263,000, and a notable decline in the unemployment rate to only 3.6%, which is as low as that metric has been in half a century. Furthermore, 3.6% was the seasonally adjusted (SA) rate. The not seasonally adjusted (NSA) jobless level was even tighter, at 3.3%.

But the good news with respect to jobs means that there is now even less likelihood that the Chairman of the Federal Reserve, Jerome Powell, will pay heed to the President’s advice to lower interest rates. The needle on the central bank’s ‘yield meter’ has undoubtedly swung away from mildly dovish towards perhaps hawkish once again.

Through the first one-third of 2019, America’s monthly average (net) jobs creation has been +205,000, a quite solid level of increase. But placing it in perspective, it’s still -6.7% compared with January-to-April 2018’s comparable figure of +220,000.

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Article source: ConstructConnect

Construction spending in various type-of structure categories is driven by economic circumstances within specific industrial subsectors. For example, manufacturers set the pace in industrial construction.

Rankings of States by Industrial Sub-Sector Jobs – ‘Weight’ and ‘Concentration’ Maps for M

anufacturing Graphic

Good health in the leisure and hospitality sector provides the backing for new hotel and motel work. And jobs levels in information and financial services, as well as in more rapidly expanding fields of endeavor such as computer systems and design services, establish the need for additional office space and commercial tower square footage. (See, “Shifts in Office Jobs and Implications for Commercial Tower Construction.”)

This article is the first in a series of seven that examines key industrial sectors to determine where they are most prominent regionally. Rankings of state strength in each industrial subsector are based on both ‘weight’ and ‘concentration’ of relevant employment. ‘Weight’ is simply the number of jobs in the industrial subsector in each state. ‘Concentration’ is each state’s number of jobs in the subsector divided by the state’s population. In effect, it’s a ‘per capita’ figure, except that it’s expressed as number of jobs per million population.

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