Article source: ConstructConnect

The U.S. foreign trade deficit deteriorated further in the latest month, sinking to -$972 billion USD in September 2021, an unwelcome record. The shortfall comes entirely in the trade of ‘goods’, -$1.178 billion. The ‘services’ balance, which includes business and tourism travel, plus between-country costs of transporting cargo, remained above water, +$206 billion USD.

Ongoing improvement in the ‘services’ surplus, though, has not been as assured as in the past. Uncharacteristically, there have been an equal number (5) of month-to-month declines in the ‘services’ balance so far this year as there have been advances (also 5).

It used to be the case that about half of the U.S. trade deficit originated with China. That was gradually suppressed to the point where China’s share shrank below 30% in June of this year. Since then, however, China’s proportion has edged back up again, reaching 35.6% in September.

Other nations have stepped forward to claim bigger slices. From the Euro area, Germany and Ireland held equal portions of the U.S. ‘goods’ trade deficit in September 2021, 5.5% each.

Ireland as such a big trading player is a bit of a surprise. It’s mainly due to U.S. purchases of Irish pharmaceuticals, with some ‘potent’ recreational beverages in the mix as well.

Read the rest of Further Slippage in U.S. Foreign Trade; Mega Projects to the Rescue?

Article source: ConstructConnect

Among ConstructConnect’s Top 10 project starts list for October are two that seem perfectly in sync with the times in which we’re living. For much of the past year-and-a-half, many of us have been cooped up at home as a precaution against contracting the coronavirus. Some of us have gone on fitness regimes; and we’ve all been aware, whether embracing it or not, of the extraordinarily swift breakthroughs made in vaccination protection.

As a direct result, pharmaceutical company Pfizer has just broken ground on a nearly half-billion-dollar modular aseptic processing facility in Michigan. And fitness equipment company Peloton has begun foundation work for a $400 million plant in Luckey, Ohio, situated south of Toledo.

Read the rest of Mid-November Economic Nuggets, With a Focus on Mega Projects, Inflation and Air Travel Statistics

Article source: ConstructConnect

The $1.2 trillion infrastructure bill, even though the dollars going towards tangible projects will be slightly less than half that amount (approximately $500 billion), and the spending will be spread out over five years, is no small matter.

Current annual spending on what might be termed ‘hard’ infrastructure (i.e., mainly engineering works such as roads, bridges, transit systems, sewers, watermains, treatment plants, communication systems and power) will be about $350 billion.

Adding in ‘soft’ infrastructure (schools and hospitals) raises the annual ‘actual’ figure close to $500 billion, but educational and medical facilities are not a primary focus of the newly passed package.

The $500 billion mentioned in the opening paragraph relative to $350 billion usually allocated per annum suggests the plan is to squeeze another year-and-a-half’s worth of spending into the next five years.

This will be wonderful stimulus for the segments of construction that lean towards ‘civil’ works but it will also mean that the pressures lifting steel and other key material input prices won’t be easily relieved.

Read the rest of Implications of the Just-passed U.S. $1.2 Trillion Infrastructure Bill

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The U.S. total jobs increase in October was +531,000 according to the latest Employment Situation report from the Bureau of Labor Statistics (BLS). A gain of more than half a million would have been met with cheering in any month prior to the pandemic. And it’s better than September’s +312,000 and August’s +483,000. But it still leaves total employment in the U.S. significantly below where it was in February 2020, just before COVID-19 touched down.

The total number of U.S. jobs at present is 148.3 million. Twenty months ago, in February 2020, the total number of jobs in the nation was 152.5 million. The difference is a remaining shortfall of -4.2 million positions.

The all-jobs claw-back ratio (i.e., the number-of-jobs rebound since April 2020 compared with the big number-of-jobs drop from February to April 2020) is now 81.2%. The jobs recovery ratio in the services sector is better at 84.9%.

Read the rest of A Return to ‘Acceptable’ U.S. Jobs Report for October; Canada’s also Okay

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U.S. housing starts, as an average of the seasonally adjusted and annualized (SAAR) monthly figures to date in 2021, have been ahead by almost a fifth (+18.5%) compared with the same January-to-September period of 2020.

Versus the first three quarters of 2019, they’ve been even more elevated, +26.8%, or up by a quarter.

In the latest individual month, though, U.S. residential groundbreakings of 251,000 units were +7.4% year over year, but -1.6% month to month.

Graph 1 makes clear that while monthly U.S. homebuilding starts have been relatively strong throughout this year so far, they have also flattened. The level of starts has shown little variability from month to month, most often resting just under 1.6 million units.

Read the rest of Legs Growing Weary in U.S. and Canadian Housing Start Sprints

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.

Read the rest of U.S. Foreign Trade Position is Worsening; Canada’s is Healing

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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.

Read the rest of Supply Shortages and Retail Sales Worries around Black Friday & Christmas

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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.

Read the rest of Wages Advance Mightily in U.S.; Maintain Moderation in Canada

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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.

Read the rest of 8 Mid-October Economic Nuggets

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.

Read the rest of Two Outstanding News Items from Sept’s U.S. and Canadian Jobs Reports