Article source: ConstructConnect

Permits Still Exceeding Starts

In the U.S., new home building, which seemed set to keep surging, has lost some of its momentum in the last two months.

In Canada in February, there was only a minor hesitancy in the headlong rush of residential groundbreakings, due to Toronto ‘playing it cool’.

Let’s look at the U.S. first. After reaching a peak level of housing starts of 1.670 million units in December of last year, the figures have dropped to 1.584 and 1.421 in the latest two months respectively.

The bias of work still leans towards single-family starts, which in February were -8.5% month to month, but +0.6% year over year. Multi-family starts lost support, declining -15.8% m/m and -28.5% y/y.

Regionally, only the West managed percentage-change increases in housing starts both m/m and y/y in February, +17.6% and +15.8%. The Northeast was -39.5% m/m and -2.5% y/y; the Midwest, -34.9% m/m and -29.9% y/y; and the South, -9.7% m/m and -16.6% y/y.

To date in 2021, the South has accounted for half (50.8%) of all housing starts nationally. The West has claimed a share a little bigger than a quarter (27.1%). The other two regions have approximately split the remainder (10.5% for the Northeast and 11.6% for the Midwest).

One shouldn’t become too discouraged by February’s pullback in total U.S. housing starts. Residential permits, which are a leading indicator for starts, have continued strong. In the latest month, they were 1.682 million units, +17.0% y/y (although they were -10.8% m/m).

Over the past 12 months, the number of permits issued in units has exceeded the number of starts, also measured in units, by 100,000. Read the rest of Housing Starts Catch Breath in U.S., Go Full Steam Ahead in Canada

Article source: ConstructConnect

ConstructConnect-OE’s GDP Projections on the Mark
Government statistical agencies in both the U.S. and Canada have recently been putting the finishing touches to their estimates of gross domestic product (GDP) growth (or, rather, lack thereof) last year.
The most recent calculation of the U.S. GDP contraction in full year 2020 versus full year 2019 places it at -3.5%. During the quarters of last year, Q2 and Q3 displayed the wildest swings, -31.4% q/q annualized, followed by +33.4% also q/q annualized. The fourth quarter closed out the year with a gain of +4.3%, q/q annualized.
‘Annualized’ means taking the quarter-to-quarter change and projecting it out (or, in other words, assuming it holds true) over a full 12-month period. There’s a compounding aspect, but it generally yields a result not much different from multiplying by four.

Read the rest of 4 Graphs that Capture U.S. and Canadian GDP Growth

Article source: ConstructConnect

Housing & Share Price Wealth Advances

For the past year, the news has been filled with deeply distressing stories about the coronavirus contagion and sectors of the economy where jobs and earnings losses have been enormous.

Against most initial expectations, however, there’s been one underpinning of the lives of many of us (keeping our fingers crossed) that has gone mainly from strength to strength, the value of our assets. Prices for residential properties have made solid gains and stock markets have been soaring.

Several pandemic-related factors have boosted housing real estate values. (1) The Federal Reserve has kept interest rates inordinately low, stimulating demand. (2) Existing-home owners are staying put, reducing the inventory of properties offered for sale.

(3) Prospective buyers are looking for accommodations with adequate square footage to facilitate the new work-from-home trend. And (4), in some instances, government income relief checks have helped with the accumulation of down payment funding.

Read the rest of A Strange Pandemic for Asset Valuations: They’ve Gone Up!

U.S. total employment in February rose by +379,000 jobs, according to the latest labor market report from the Bureau of Labor Statistics (BLS). Prior to the pandemic, a month-to-month jump in jobs of +379,000 would have been greeted with cheers. As Graph 1 shows, however, February’s gain was a rather small blip in the grand scheme of things.

Furthermore, it barely moved the needle with respect to the jobs recovery ratio as set out in Table 1. February’s jobs claw-back ratio (i.e., relative to the huge jobs losses that occurred from February to April of last year, when the coronavirus first struck) improved only slightly, to 53.8% from 52.1% the month prior.

The gap to achieve full employment remains formidable. February’s seasonally adjusted (SA) unemployment rate shrank by a miniscule amount, to 6.2% from 6.3% in January. A year earlier, in February 2020, it had been 3.5%, which brings up an important point.

Read the rest of What’s to Like or Not Like About February’s +379,000 U.S. Jobs Count

Article source: ConstructConnect

Due to the blows to the economy last year from coronavirus impacts, undertaking mega-sized construction projects presented owners with riskier decision-making.

The number of big-dollar projects (i.e., of a billion or more each) fell dramatically, to only 11 from 70 in 2019. The number of big footprint projects (i.e., of a million square feet or more), however, stayed about even in 2020 with the year before, at 26.

In this article, we’ll look at the nature of 2020’s mega projects according to the two definitions and discuss some interesting contrasts. For example, billion-dollar projects, especially when they’re in the energy or transit fields, don’t necessarily have enclosed flooring of a million square feet.

Read the rest of 2020 U.S. Mega Construction Projects & Carryover of Work into 2021.

Article source: ConstructConnect

In mid-March of last year, the consequences of coronavirus infections stopped being hypothetical, mainly happening elsewhere, and instead became very real as they landed on our doorsteps.

Suddenly, offices were being emptied, with workers trying to set up from home. Social distancing became the new mantra, the economy went into lockdown, borders were closed, and travel ceased.

One of the sectors that suffered immediate and severe damage was the airline industry. Passenger traffic through airports took a hit to a degree never seen before.

Turning off the lights at airports leaves a huge hole in local economies. There’s a vast eco-system that begins to starve. Negatively affected are workers who handle car rentals, taxi and limo drivers, onsite retail and restaurant employees, baggage and cargo handlers, ticket agents, air traffic controllers, flight crews and numerous others working in professional and support roles.

Read the rest of Graphs Showing U.S. and Canadian Air Passenger Traffic Deeply Troubled

Article source: ConstructConnect

The ease with which the U.S. and Canadian economies recover from the coronavirus-caused economic downturn is very much going to depend on whether we can escape without a significant upsurge in inflation.

Over the next six months to a year, everyone in my profession will be keeping an eagle eye on how prices are performing.

For the moment, general price inflation, as represented by Consumer Price Index (CPI) numbers, remains restrained, although there are some indications that ‘all item’ and ‘core’ values are flirting with +2.0% year over year. For example, in Canada, two of the three ‘core’ measures monitored by the Bank of Canada now do sit at +2.0% y/y. The third BoC ‘core’ measure is +1.3% y/y (see lower text box in Chart 5).

Read the rest of Moderate versus Over-heated Inflation as the Fulcrum for Well-Being

Article source: ConstructConnect

There are some exciting stories to tell about new home building in the U.S. and Canada at the beginning of this year. Let’s cover the U.S. first.

Monthly average U.S. housing starts (seasonally adjusted and annualized/SAAR) in 2020 were 1.396 million units, +7.8% versus 2019’s figure of 1.295 million.

In January of the current year, starts rose some more, to 1.580 million units, +13.2% versus 2020’s 12-month average.

The monthly average for single-family starts in 2020 was a conveniently memorable one million units, +12.0% to 2019’s 893,000. In January 2021, there was a further bump to 1,162,000 units, +16.2% versus last year’s monthly average.

Read the rest of U.S. & Canadian Economies Lifted by Fervent Swirl of Housing Starts

Article source: ConstructConnect

Short of going directly to suppliers or specialty newsletters for information, the best source of data on construction material cost movements is to be found in the Producer Price Index (PPI) figures published by the Bureau of Labor Statistics (BLS).

The January 2021 PPI numbers confirm that lumber- and steel-related markets, as well as some others, are, indeed, ‘hot’.

Table 1 sets out PPI percentage changes for 15 crucial construction material inputs over two distinct time frames, the past year and the latest three months.

On a year-over-year basis, the biggest price movements have been recorded by softwood lumber, +73.0%; particle board and oriented strand board (OSB), +70.3%; iron and steel scrap, +50.8%; plywood, +35.6%; copper wire and cable, +12.5%; and prefabricated metal buildings, +12.4%.

Read the rest of Soaring Lumber & Steel Prices Confirmed by Latest PPI Results

Article source: ConstructConnect

As I sit writing this Nuggets report, it’s just after Valentine’s Day and we’re about one month away from the mid-March annual anniversary of when the coronavirus descended on us all and turned our employment and social lives upside down, amidst the terrible medical toll taken on the population at large.

Saying 2020 was a ‘difficult’ year is an epic understatement. Among bad years, even throughout history, 2020 was one of the sorriest. The myriad statistics generated last year reflected the grim reality.
Read the rest of 13 Mid-February Economic Nuggets Spotlighting Construction Jobs & Foreign Trade