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Alex Carrick, Chief Economist at ConstructConnect
Alex Carrick, Chief Economist at ConstructConnect
Alex Carrick is Chief Economist for ConstructConnect. He is a frequent contributor to the Daily Commercial News and the Journal of Commerce. He has delivered presentations throughout North America on the Canadian, United States and world construction outlooks. A trusted and often-quoted source for … More »

Construction Material Costs – Latest PPI, IPPI and RMPI Results, U.S. and Canada

 
March 2nd, 2018 by Alex Carrick, Chief Economist at ConstructConnect

Article source: ConstructConnect

When assessing building material cost changes, the primary source for the U.S. is the Producer Price Index (PPI) data series calculated by the Bureau of Labor Statistics (BLS). (The BLS is also responsible for the Consumer Price Index.)

2017-05-05-US-Canada-PPI-Graphic

For Canada, one turns to the Industrial Product Price Index (IPPI) and Raw Materials Price Index (RMPI) data series from Statistics Canada.

While the history of the latest PPI numbers (Table 1) extends to January 2018, the IPPI and RMPI figures (Table 2) are currently available only through December 2017.

The PPI results include specific findings for ‘final demand construction’ (i.e., overall construction) as well as private capital versus government investment, plus five specific type-of-structure sub-categories.

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Ten Mid-February Economic Nuggets – With a Focus on Inflation Fears

 
March 1st, 2018 by Alex Carrick, Chief Economist at ConstructConnect

Article source: ConstructConnect

At the beginning of February, there was a great deal of volatility in the U.S. major stock market indices. They fell into ‘correction’ territory, which in ‘market-talk’ means they dropped by 10% from their peaks, before steadying and heading cautiously upwards again.

Ten Mid-February Economic Nuggets Graphic

Some of the initial downward movement was due to profit-taking, on the heels of years of exceptional equity price gains. As the retreat grew more severe, however, it became harder to explain, especially since the recently passed tax cuts will provide an extra boost to corporate bottom lines.

A consensus explanation gradually emerged and it goes as follows. Yes, the economy is growing rapidly and job creation is outstanding. But maybe output growth and labor market conditions are too good. The level of unemployment has dropped near a historical low. Can wage restraint hold? Furthermore, there is a synchronous world expansion underway and commodities demand is heating up. Prices for key raw materials are climbing once again.

All these developments have the potential to light a fire under inflation. And if inflation is on the rise, the Federal Reserve may feel the need to initiate ‘cooling’ interest rate hikes faster than earlier anticipated. Some economic forecasting firms are already projecting there will be four, not three, interest rate increases this year.

Therefore, perhaps the hottest topic for discussion throughout 2018 will be how inflation is performing. Specifically, is the ‘Consumer Price Index for All Urban Consumers (CPI-U)’ busting free from its +2.0% (year over year) bondage and raising more havoc?

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New Industry Snapshot dated February 2018 and based on January starts stats

 
February 15th, 2018 by Alex Carrick, Chief Economist at ConstructConnect

Article source: ConstructConnect

ConstructConnect announced today that January’s volume of construction starts, excluding residential activity, was $29.3 billion. The fact that some of the monthly starts numbers can display wild swings is confirmed by the following. January 2018’s volume of starts relative to December 2017’s level was +35.8%; but January 2018 compared with January 2017 was -22.6%.

2018-02-14-US-Nonresidential-Construction-Starts-January-2018

The outsized percentage changes resulted from December 2017 being abnormally low ($21.6 billion) and January 2017 being inordinately high ($37.9 billion). Usually, it’s the presence or absence of a mega project or two that causes the monthly number to display extreme volatility.

Comparing January of this year with the annual average for January from the preceding five years, 2013 to 2017, − i.e., employing a ‘smoothing’ technique, − yields an increase of +9.7%.

The starts figures throughout this report are not seasonally adjusted (NSA). Nor are they altered for inflation. They are expressed in what are termed ‘current’ as opposed to ‘constant’ dollars.

View this information as an infographic.

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Canada’s January Jobs Report Shocks on the Downside

 
February 8th, 2018 by Alex Carrick, Chief Economist at ConstructConnect

Article source: ConstructConnect

After exceptional increases in total employment in the final two months of last year – i.e., +81,000 jobs in November and +65,000 jobs in December − January of 2017’s figure of -88,000, as just reported for Canada by Statistics Canada, is a major shock.

The foregoing numbers are based on seasonally adjusted (SA) data. SA versus NSA (not seasonally adjusted) will become important as this article unfolds.

Canada’s January Jobs Report Shocks on the Downside Graphic
To place the latest month in context, January’s steep slide was the most severe since January 2009’s descent of -125,000 jobs. But in January 2009, the Great Recession was feasting on the economy and the resulting devastation in the labour market was not unexpected.

To lose 88,000 jobs when year-over-year GDP has been growing nicely, at a pace of about +3.0%, is quite another matter.

Furthermore, the composition of that drop seems unusual. There was a +49,000 gain in full-time work that was overwhelmed by a -137,000 step-down in part-time jobs.

At no other time since the turn of the century has the month-to-month retreat in part-time jobs been as dramatic as -137,000. The sharpest decline prior to the latest month was only 60% as bad, at -78,000 in March 2011.
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2018’s First Monthly Jobs Report Launches Year in Fine Style

 
February 2nd, 2018 by Alex Carrick, Chief Economist at ConstructConnect

Article source: ConstructConnect

In January, net new U.S. jobs creation was +200,000, according to the latest Employment Situation report from the Bureau of Labor Statistics. The +200,000 jobs figure was greater than the monthly average increase throughout last year of +176,000.

The unemployment rate in the latest month stayed the same as in December, at 4.1%. Only rarely in the past has the jobless level been better. The last time it managed to slip below 4.0% was seventeen years ago, in 2000 at the beginning of the new century.

2018-02-05-US-Construction-Labor-GraphicThe ongoing strength in employment continues to find confirmation in the weekly initial jobless claims data. At the height of the Great Recession, the number of first-time unemployment insurance seekers in the economy soared to a truly unpleasant peak of 653,000.

A figure of 300,000 or less is generally considered by analysts to be the benchmark for when the labor market is ticking along smoothly. After the Great Recession, it seemed to take forever for initial jobless claims to recede to the 300,000 level.

The actual length of time that was covered waiting for that magic moment was six years. It occurred for the week ending March 7, 2015.

Oh how things have changed since then!

In four weeks’ time, if initial jobless claims remain low, they will be under 300,000 for 156 weeks in a row, or three straight years. (For January 13, 2018, they were a ‘rock bottom’ 216,000. For the latest week ending January 27, 2018, they were 230,000.)
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Rankings of U.S. State Construction Employment Statistics

 
January 8th, 2018 by Alex Carrick, Chief Economist at ConstructConnect

Article source: ConstructConnect

The tables accompanying this article highlight some of the key statistics on construction employment in 48 U.S. States. The source material from the Bureau of Labor Statistics (BLS) omits Delaware, the District of Columbia (D.C.) and Hawaii. The most recent data is for November 2017 and is not seasonally adjusted (NSA).

2018-01-05-US-Construction-Labor-Graphic

Table 1 ranks states by number of construction workers; Table 2 ranks states by year-over-year change in number of construction workers; and Table 3 ranks states by year-over-year percentage change in number of construction workers.

It’s not surprising that the large-population-states also account for the highest numbers of construction workers. The ranking positions 1 through 7 in Table 1 − i.e., California followed by Texas, Florida, N.Y., Pennsylvania, Illinois and Ohio − exactly correspond with the latest (for July 1, 2017) state population rankings.

Further down the listing, however, there are some significant variances. For example, Georgia is 8th for population, but 11th for construction employment; Michigan is 10th for population, but 13th for construction employment; New Jersey is 11th for population, but 15th for construction employment; Washington is 13th for population, but 9th for construction employment; Maryland is 19th for population, but 12th for construction employment; Colorado is 21st for population, but 14th for construction employment; and Louisiana is 25th for population, but 17th for construction employment.

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U.S. December Jobs Creation ‘Weakish’, but Construction Compensation Bullish

 
January 5th, 2018 by Alex Carrick, Chief Economist at ConstructConnect

Article source: ConstructConnect

U.S. net total jobs creation in the final month of last year was a tepid +148,000, according to the latest Employment Situation report from the Bureau of Labor Statistics (BLS). The ‘weakish’ December result caused the monthly average throughout all 2017 to pull back slightly to +171,000

Just the same, +171,000 as a monthly average in 2017 signifies a more than satisfactory performance, although it was down from 2016’s comparable figure of +187,000.

The U.S. unemployment rate in December remained the same as in November, at an exceptionally tight 4.1%.

The seasonally adjusted (SA) number of U.S. construction jobs recorded a nice gain in December of +30,000. Such a substantial increase in employment for on-site workers was the biggest leap since February 2017’s +54,000.
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U.S. Put-in-place Construction Spending Sprightlier in November

 
January 3rd, 2018 by Alex Carrick, Chief Economist at ConstructConnect

Article source: ConstructConnect

After a stretch of several months earlier in the second half of 2017, when many of the Census Bureau’s sub-category put-in-place (PIP) construction spending numbers stalled, some sprightlier results were recorded once again in November.

Given that 11 of last year’s 12 months have now been measured, the 2017 over 2016 year-end percentage-change for total construction will almost certainly be close to +5.0%. All the increase will have originated in the residential sector, +11.0%, with non-residential remaining flat.

It’s important to note, however, (i.e., from accompanying Table 1) that with respect to latest three-month results, non-residential work has been staging a comeback. For latest 3-months over previous 3-months (annualized), ‘total’, residential and non-residential are almost the same, only slightly below +9.0%
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Construction’s Interaction With High-Tech is Much More Than the Obvious

 
December 19th, 2017 by Alex Carrick, Chief Economist at ConstructConnect

Article source: ConstructConnect

Construction’s interaction with high-tech is much more than the obvious.

Total Employment Increase in U.S. and Canada in November +300,000

 
December 15th, 2017 by Alex Carrick, Chief Economist at ConstructConnect

Article source: ConstructConnect

November’s Employment Situation report from the Bureau of Labor Statistics (BLS) records a net gain in U.S. total jobs during the month of +228,000.

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