Article source: ConstructConnect

An important story that’s emerging in what are hopefully the winding-down days of the pandemic concerns supply shortages and cost hikes.

The all-items U.S. Consumer Price Index (CPI), which has been consistently under +2.0% year over year for an extended period, suddenly shot up to +4.2% y/y in April, as a result of moving +0.8% in just one month.

As everyday shoppers, you and I may feel we have something to gripe about. But consider the plight of the unfortunate contracting community. Our soaring expense frustrations pale beside what beleaguered contractors are facing.

Table 1 shows y/y and latest-three-month price hikes for 15 major construction materials and some of the key ingredients of building products (e.g., aluminum in ventilation systems).

Table 1 is a subset of Table 2 which appears at the end of this article and includes a comprehensive list of construction material inputs and special indices. All the numbers come from the Producer Price Index (PPI) data set compiled by the Bureau of Labor Statistics (BLS).

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Coronavirus Continues Negative Influence

Canada suffered a disappointing setback in its quest for jobs recovery in April. According to Statistics Canada, total employment fell by -207,000 jobs in the month, as further incursions of the coronavirus forced stricter closure regimes in many parts of the county.

The seasonally adjusted (SA) unemployment rate rose to 8.1% from 7.5% in March; the not seasonally adjusted (NSA) rate rose to 7.1% from 6.9%. There’s some consolation to be found in knowing the SA and NSA unemployment rates a year ago were much higher at 13.1% and 12.1% respectively.

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A Number to Embrace with Enthusiasm
April’s Employment Situation report, released today by the Bureau of Labor Statistics (BLS), records an increase in total U.S. employment of +266,000 jobs month to month. While plus a quarter of a million net new jobs seems, on first blush, to be an impressive figure, Graph 1 makes clear that it registers as only a minor blip in the context of the employment swings we’ve been seeing over the past 14 months.
Furthermore, due to a slight uptick in the participation rate, from 61.5% in March to 61.7% in April, the seasonally adjusted (SA) unemployment rate in the latest month deteriorated to 6.1% from 6.0% in the prior month.
But there is one number on the jobs front to be embraced with enthusiasm. The ‘leisure and hospitality’ sector has been bearing the brunt of the economic downturn initiated by the coronavirus infection outbreak last year. Finally, a turning point appears to have been reached.
Coincident with the aggressive vaccine rollout and timed to greet warmer and healthier summer weather, bars and restaurants have dramatically changed tack. In April, staffing in the sector shot ahead by +331,000 jobs. The year-over-year increase in ‘leisure and hospitality’ employment was +69.1%.
Such an outsized percentage-change figure highlights an effect we’ll be seeing for months to come. Because of the big drop in jobs in March-April of 2020, comparisons of the current year with last year will benefit from a low base (i.e., low denominator) in the math calculation.

Read the rest of +266,000 for Total U.S. Jobs Not So Great; +331,000 for Leisure & Hospitality Jobs Rates Cheers

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The construction sector is presently generating several big news stories. One relates to building material costs; another concerns infrastructure spending plans. But in this article, through standalone graphs, I’d like to show the boom that is currently underway in housing starts, evident more so in Canada, but also quite apparent in the United States.
In March, U.S. housing starts climbed above 1.7 million units seasonally adjusted and annualized (SAAR) for the first time since before the previous recession (i.e., the 2008-09 ‘global financial crisis’). Meanwhile, in Canada, housing starts have soared more than 50% above their long-term average (200,000 units) and 20% beyond their previous cyclical high point (277,000 units).
In March, Canadian new home starts skyrocketed to 335,000 units SAAR, according to CMHC. That’s a figure I doubt many analysts thought they would see any time soon, especially given that population growth through immigration has slowed to a crawl due to pandemic-related border-crossing closures.
Absent the inflow of individuals from afar, the housing booms in both the U.S. and Canada are being generated domestically. Working from home to combat COVID-19’s spread is inspiring a whole lot of people to want to upgrade the ambience of where they are now spending almost all their time.
Plus, bargain interest rates are hanging on ‘financing trees’ like bright shiny baubles to be grabbed before they disappear.
In the following 12 graphs, the text boxes will lead readers through a story that will hopefully be the first of many indicating much sturdier underpinnings for the U.S. and Canadian economies as we transition away from the health crisis and towards sunnier prospects.

Read the rest of Who Knew a Pandemic Would Lead to a Housing Boom?

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Global Stock Market Improvements Broadly Based, Finally

On the world economic stage, matters have been taking a turn for the better once again. Table 1 shows that for the first time since before the pandemic, all the major stock markets globally registered year-over-year index gains at the end of March.
For much of last year, only the North American indices managed to make headway. Presently, the increases are broadly based. Even the two exchanges with the poorest records, Hong Kong’s Hang Seng and London’s FTSE, are up by decent, if not outstanding amounts, +20.2% and +18.4% respectively.
Furthermore, NASDAQ has surrendered leadership status among all indices. The ‘small cap’ Russell 2000 index pulled off the biggest year-over-year jump at the end of this year’s Q1, +92.6%. NASDAQ was in second place, at +72.0%, but third, fourth and fifth spots were claimed by foreign indices: ‘iShares Emerging Markets, Asia’, +59.3%; ‘iShares Emerging Markets, Worldwide’, +56.3%; and Tokyo’s Nikkei 225, +54.2%.
The German DAX 30 has also done well, +51.0% y/y as of March 31st, keeping up with the S&P 500, +53.7%, and the DJI, +50.5%. In March, The German DAX 30 scored the highest month-to-month gain among the 14 indices, +8.9% (see Table 2).
Graph 1 illustrates how the NASDAQ index has flattened out of late, as investor attention has shifted mildly away from high-tech firms towards traditional cyclical winners, and companies that will benefit from the pick-up in world trade that is in its nascent stage.
Not to be overlooked, however, Graph 2 sets out the truly remarkable increases realized by the U.S. major indices since their last major troughs in February 2009. The DJI in the past dozen years has climbed +367%; the S&P 500, +441%; and NASDAQ, +861%.

Table 1

Article source: ConstructConnect
The most recent changes are set out in the tables and graphs below, for U.S. and Canada.

The data is based on price indices from the Bureau of Labor Statistics (through March) and from Statistics Canada (through February).

Read the rest of The most recent changes are set out in the tables and graphs below, for U.S. and Canada.

Article source: ConstructConnect

This latest version of the mid-month Nuggets report, rather than proceeding in point form, discussing recent data releases, will be expository concerning some of the most important economic issues of the day.
Until last Thursday, April 15^th, whenever thoughts of a considerably cheerier economic outlook arose, there was a giant BUT that stood in the way. Weekly initial jobless claims as a leading indicator continued to be stuck in the stratosphere. How could one speak confidently of an upcoming surge in demand when the number of individuals seeking unemployment insurance for the first time remained higher than the peak level in the previous recession, 2008-2009 (see Graph 1).
Initial jobless claims were close to or well above 700,000 for a full year, after the coronavirus pandemic first lit into the economy in mid-March of last year. With last Thursday’s result, however, for the week ending April 10^th, the number finally showed the kind of improvement needed to put the past aside and begin to look encouragingly towards the future. It dropped by -193,000 to settle at 576,000, finally descending through the 600,000-benchmark. There’s legitimate hope that in short order it will break through 500,000, then 400,000, as well. (The month-to-month pickup in total U.S. employment in March exceeded a million jobs, including the revision to February’s originally reported number.)

Read the rest of ConstructConnect’s Mid-April Economic Nuggets, With an Emphasis on Supply Shortages & Costs

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Tough Competing with ‘Normal’ but 3 Mega Projects Helped
ConstructConnect announced today that March 2021’s volume of construction starts, excluding residential work, was $32.2 billion, an increase of +60.1% versus February’s distressed level of only $20.1 billion.
Total nonresidential (NR) groundbreakings in the latest month received boosts from three mega-sized projects, an auto plant expansion in Tennessee and two big hospital jobs located in Ohio and California.
Leaving aside the exceptional weakness of total NR starts in the previous month (February), latest March’s starts volume failed to match year-ago March’s level, falling short by -7.9%.
Also, year to date starts through the first quarter of 2021 were off by one-fifth (-20.0%) relative to January-March 2020.
Keep in mind that Q1 of last year was mostly ‘normal’ with respect to a broad range of economic indicators, including ‘starts’. The truly harmful effects caused by the outbreak of coronavirus infections occurred from Spring 2020 on. Proceeding further into 2021, a ‘diminishing base (or denominator) effect’ will put a better polish on year-over-year comparisons.

The Starts vs PIP Relationship
‘Starts’ compile the total estimated dollar value and square footage of all projects on which ground is broken in any given month. They lead, by nine months to as much as two years, put-in-place (PIP) statistics which are analogous to work-in-progress payments as the building of structures proceeds to completion.
PIP numbers cover the ‘universe’ of construction, new plus all manner of renovation activity, with residential traditionally making up two-fifths of the total and nonresidential, three-fifths (i.e., the bigger portion). Presently, though, according to the Census Bureau’s February 2021 PIP report for total U.S., the mix has skewed more towards residential (47% of the total) and away from nonresidential (53%) than usual.
PIP numbers, being more spread out, have smaller peak-over-trough percent-change amplitudes than the ‘starts’ series. As an additional valuable service for clients and powered by its extensive ‘starts’ database, ConstructConnect, in partnership with Oxford Economics, a world-leader in econometric modeling building, has developed put-in-place construction statistics by types of structure for U.S. states, cities and counties, ‘actuals’ and forecasts.

Read the rest of March Nonresidential Construction Starts +60% M/M But -8% Y/Y and -20% Ytd