Article source: ConstructConnect

Some Significant Month-to-Month Starts Gains

ConstructConnect announced today that the latest month’s volume of construction starts, excluding residential work, was $28.9 billion, a gain of +4.3% versus October’s $27.8 billion (originally reported as $25.9 billion).

Usually, there’s a slight decline in the volume of starts from October to November due to seasonality, i.e., the weather turning colder. (As a ‘heads up,’ seasonality becomes even more pronounced in December through February.)

Read the rest of November Nonresidential Construction Starts Recorded Some Welcome Upticks

Article source: ConstructConnect

In U.S., a Quarter Million More Jobs Doesn’t Cut It

According to the Bureau of Labor Statistics (BLS), the U.S. total jobs increase in November was +245,000. That would have been a decent enough number to report ‘back in the day’ when a coronavirus-like attack was unimaginable. But having gone through an unprecedented decline in employment in the Spring of this year, +245,000 is but a drop in the bucket compared to what’s needed to fully restore good health to the U.S. jobs market

The +245,000 number for November is down from the +610,000-figure recorded in October, which was itself considered disappointing. The extent of the problem is highlighted in Table 1. Between February and April, 20.5 million jobs disappeared in America. Since April, 10.7 million jobs have been reacquired; but that leaves the jobs-recovery ratio (or ‘claw-back’ ratio) at only 52.1%, or just slightly more than half. Hopes for a V-shaped recovery in the economy have been dashed.

Table 1

Read the rest of Minimal Claw-Back Ratio Upticks in November U.S. & Canada Jobs Reports

Article source: ConstructConnect

October Starts Moved Sideways

ConstructConnect announced today that the latest month’s volume of construction starts, excluding residential work, was $25.9 billion, nearly a match (-0.4%) for prior-month September’s $26.0 billion (originally reported as $24.3 billion). October’s year-to-date figure, however, remained down significantly compared with the first ten months of last year, -27.8%.

Given that October starts usually feature a mild seasonal decline, due to the arrival of cooler weather, it’s good news that the latest month stayed almost level (-0.4%) with September. But it’s important to record that October 2020 was way down compared with October 2019, -41.5%.

Often, in 2020, the individual monthly figures when compared with the same month of 2019 have fallen short with respect to mega proj- ects of a billion dollars of more each. 2019 was an exceptional year for ultra-large project initiations. (There were 35 of them, adding to $79 billion and 15% of total nonresidential starts.) May and August 2019 were the peak months for ‘megas’.
Read the rest of October’s Nonresidential Construction Starts -28% Ytd, but Level M/M

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• Inflation Down for the Count?
• Some of the Buffers Against Inflation are Weakening or Disappearing

Inflation Down for the Count?

The year-over-year change in consumer prices in the U.S. in October was +1.2%, according to the Bureau of Labor Statistics (BLS). In Canada, the latest month’s price climb was only +0.7% y/y, as calculated by Statistics Canada.

October’s y/y ‘core’ rates of inflation, which leave out volatile energy and food components, were +1.6% and +0.8% south and north of the border respectively.

The current rates of inflation in both countries are tepid and no cause for alarm. In fact, it’s been many years since inflation has been the terrifying prospect it once was.

A little inflation, of say around +2.0% y/y, is a good thing. It greases the wheels of economic activity, making loans easier to pay down for both business and individual borrowers. Current price hikes aren’t rising to even +2.0% y/y.

There have been background factors working to suppress inflation, however, and some of those buffers are weakening or disappearing. The next section will elaborate on some of those changes. Read the rest of No Reason to Fear Inflation? 8 Hypotheses Argue Otherwise

Article source: ConstructConnect

October’s Employment Situation report from the Bureau of Labor Statistics (BLS) records a +638,000 pickup in U.S. total employment, not much different from September’s increase of +672,000.

The U.S. seasonally adjusted (SA) unemployment rate in the latest period improved to 6.9% from 7.9% in the prior period. The not seasonally adjusted (NSA) unemployment rate showed similar movement, downshifting to 6.6% from 7.7%.

Versus the huge drop in total employment from February to April of this year, the U.S. economy has now managed a jobs recovery ratio of 50.9%. That’s progress, but it certainly doesn’t warrant being called wonderful. At least with respect to the labor market, a V-shaped recovery has not materialized.

Total U.S. employment year over year presently stands at -6.1%, comprised of services at -6.7%; manufacturing, -4.5%; and construction, -2.6%.

The construction jobs jump in October was a noteworthy +84,000, leaning more towards to nonresidential work than residential. This runs counter to the expectation that it will be housing starts that will provide sustenance to the industry over the next little while.

Construction’s NSA unemployment rate is currently 6.8%, better than the previous month’s 7.1%, but considerably elevated from its year-ago level of 4.0%.

Earnings in construction are still notably lagging earnings for all jobs. Whereas the all-jobs compensation gains in October were +4.5% y/y hourly and +5.7% weekly, hard-hat workers made only +2.8% hourly and +1.5% weekly.

Read the rest of October’s Jobs Gains Lift U.S. Claw-Back Ratio to 50.9%; Canada’s to 78.9%

Article source: ConstructConnect

U.S. gross domestic product (GDP) in Q3 2020 increased by about 1/3 after falling to about the same degree in Q2, but it is still 5% under what it would have been without the onset of the coronavirus crisis.

There are two jobs numbers that will tell us when the economy has returned to nearly robust health:

• Versus the huge drop in employment between February and April, the number of jobs recovered to date has yielded a decent claw-back ratio (50%), but it needs to rise a lot higher. Not until the jobs-recovery ratio approaches 90% will there be strong confidence that the economy is firmly back on track.

• The weekly initial jobless claims number is proving to be sticky. For more than 30 weeks, it has exceeded its peak level (just under 700,000) achieved in the 2008-2009 recession. Last week, it was close to 800,000. I’d like to see the figure drop to at least 400,000 … and 300,000 or lower would be that much better.

Everyone knows that consumer spending comprises 70% of U.S. gross domestic product (GDP). In turn, retail sales make up a little less than half of consumer spending. Monthly retail sales numbers say a great deal about what is going on both in society and in the economy.

Presently, Internet sales are ahead by one-quarter year over year, because of the surge in shopping from home that is taking place. This also explains why ‘bricks and mortar’ retail in shopping malls is so distressed.

Read the rest of U.S. Economic and Construction Outlooks as the Vote Hangs in the Balance

Article source: ConstructConnect

So Far, PIP Construction Not Too Alarming, But …

The headline numbers on U.S. put-in-place (PIP) construction spending, from the Census Bureau, continue to be somewhat reassuring ‒ or, at least, not too alarming.

In September, the total dollar volume of $1.414 trillion (seasonally adjusted and annualized) was +0.3% month to month, with residential at +2.7% and nonresidential, -1.6%.

On a year-over-year basis, September’s total PIP figure was +1.5%, with residential (+10.1%) pulling ahead and nonresidential (-4.4%) stepping back.

Residential PIP is holding up nicely; nonresidential, not so much. The former is 44% of the total, with the latter at 56%. The relationship is usually nearer to 40% versus 60%.

A closer look at the numbers, especially in the nonresidential sphere, is warranted.

Read the rest of The Slide in U.S. PIP Construction Spending is Just Beginning

Article source: ConstructConnect

Highlights

•  US construction starts fell 28.2% year-on-year and 19.9% year-to-date in Q3 2020. Non-residential building experienced the steepest decline, as the pandemic has weighed on the prospects of sectors such as hospitality, retail, and office working. The decline in civil engineering construction was exacerbated by some mega projects in 2019 falling out of the calculation. The decline in residential homebuilding has been driven by construction of apartments, with the single-family segment holding steady.
• The pace of the recovery has slowed markedly, driven by the expiry of fiscal stimulus, rising infection rates, and election uncertainty. Our baseline forecast assumes that Congress will eventually pass a new fiscal aid package, but even if Biden wins the election and delivers fiscal aid in 2021, the economy would stall in Q4 2020. We see the economy contracting 3.5% in 2020 and expect a relatively soft rebound of 3.7% in 2021.
•  US construction activity is forecast to decline more deeply in 2020 than during the global financial crisis of 2008-09. Non-residential construction will see the sharpest falls amid weak business investment. Residential activity will hold up relatively well, particularly within single-family construction. Looking ahead, we forecast a rebound in growth from 2021 but it will be slow and unevenly distributed.
• Total construction starts in Canada in Q3 declined 43.9% year-on-year and 28.6% year-to-date, with declines in all three headline segments. Restricted construction earlier in the year has largely resumed, but strong activity in Q3 2019 has fallen out of the annual calculation.
• Headline construction starts are forecast to decline by nearly 30% in 2020, following a contraction last year as well. In the recovery phase, new construction activity is expected to grow at a double-digit pace through 2023, but it is not expected to regain its pre-pandemic high (in 2018) until 2023.

Read the rest of Winter 2020-2021 edition of our 22-page Forecast Starts report, U.S. & Canada. ..

Article source: ConstructConnect

Two key numbers on the U.S. economy were released this morning at 8:30 a.m.: (1) the standard weekly initial jobless claims number; and (2) the ‘Advance Estimate’ of Q3 gross domestic product (GDP) change.

Both results are highlighted in the graphs below. The bigger story is sure to be the outsized increase in GDP and I’ll come to that in a moment.

But first, initial jobless claims remained ‘sticky’. For the week ending October 24, they were 751,000.

They have been higher than 2008-2009’s recessionary peak of 665,000 for 32 weeks in a row.

They need to fall to around 400,000 before there can be sighs of relief that the economy is truly on the mend.

In the last recovery phase, it was when they moved below 300,000 that optimism reigned once again.

Read the rest of 2 Charts on Today’s 2 Key U.S. Data Releases: Q3 GDP & Initial Jobless Claims

Article source: ConstructConnect

U.S. Housing Starts Surprisingly Buoyant Year to Date

One of the true economic surprises of the pandemic is how little sway it has been holding over housing starts.

In the U.S. (Graph 1), the Census Bureau is saying that year-to-date monthly average residential groundbreakings (in units) are +6.5% compared with January-to-September 2019.

In Canada (Graph 9), as reported by CMHC, monthly average starts are basically level with last year, +0.7%, but that’s commendable considering how much havoc has been created elsewhere in the economy by the coronavirus health crisis.

There have been only two months of extreme weakness in U.S. housing starts to date in 2020 that can be attributed to pandemic lockdown measures ‒ April (934,000 units seasonally adjusted and annualized/SAAR) and May (1.038 million units).

In September, American housing starts were back above 1.4 million units. Regionally (Graph 7), on a percentage-change basis, the Midwest has been leading (+12.7%), followed by the West (+6.8%) and the South (+6.1%), with the Northeast (0.0%) in a holding pattern.

Read the rest of 13 Graphs Show U.S. and Canadian Housing Starts Shrug Off Pandemic