The AEC Lens 
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 » Latest Annual U.S. and Canadian City Housing Starts (Parts 1)February 24th, 2016 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup This Economy at a Glance (EAAG) will look at home starts in major U.S. and Canadian cities, according to ‘totals’ (Part 1), plus single-family (Part 2) and multi-family (Part 3) markets. The accompanying tables rank the dozen American and half-dozen Canadian cities by actual start levels in 2015 and year-over-year percent changes. For both the U.S. and Canada, the cities are the broad designations (MSAs and CMAs) which include downtown cores plus all suburbs with close live-work commuting ties. The website versions of these three articles include a wealth of graphs, since it is often true that a picture is worth a thousand words. Nevertheless, here’s commentary on total new home groundbreakings in the 18 major cities. In the U.S., the monster-sized market for total housing starts in 2015, at 86,400 units, was New York. Two cities in Texas, Houston (56,900) and Dallas-Fort Worth (56,400), were in second and third places respectively, but way back. Los Angeles (33,700) and Atlanta (30,000) placed fourth and fifth. Defying Usual Seasonal Decline, CMD’s January Starts Rose 9.8%February 17th, 2016 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup CMD announced today that January’s level of U.S. construction starts, excluding residential work, was $24.7 billion, an increase of 9.8% versus December. The nearly double-digit percentage increase was noteworthy since there is usually (i.e., average over 10-years-plus) a December-to-January decline, due to seasonality, of 8.5%. Compared with January of 2015, the latest month’s starts level was +12.9%. Relative to average non-residential starts in January over the preceding five years, 2011 to 2015, the gain was +18.6%. 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. ‘Non-residential building’ plus ‘engineering/civil’ work accounts for a considerably larger share of total construction than residential activity. The former’s combined proportion of total put-in-place construction in the Census Bureau’s December report was 63%; the latter’s was 37%. Canada’s Currency Drop Encourages CocooningFebruary 16th, 2016 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup My favorite meal when traveling on business or pleasure used to be breakfast in the hotel where I was staying. In the ‘old days’, a morning repast was almost invariably cheap, plentiful and delicious. Last summer, I took my family to Chicago for some wonderful sightseeing. We live in Toronto. (Our oldest child has moved out of the house and he and his girlfriend undertake their own travel adventures.) The price of the breakfast buffet where we were registered downtown was $32.50 USD. For the four of us, that would have come to $130.00 USD. Such a charge would have been steep enough on its own. Factor in the value of the Canadian dollar at the time, and the price was going to be $160.00 CAD. Consider the further devaluation in the loonie since then, and the pain rises to $185.00 CAD. That’s serious coinage. It’s nearly enough to rent a tuxedo, which I’ve always considered to be an excursion into luxury land. The Greenback and Yuan are Ships Passing in the NightFebruary 15th, 2016 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup The steep descent in the global price of oil began in early July 2014. It was rapidly accompanied by moderate to severe pullbacks in the posted charges for many other commodities. Not by coincidence, late-summer 2014 was also the moment that launched many radical readjustments in currency values around the world. Resource-supplying nations, suffering damage to their foreign trade balances, have been experiencing the most severe exchange rate declines ever since. Russia, Brazil, Australia and Canada are the prime examples. The United States, viewed by international currency traders as a safe haven amidst all the turmoil, has seen its dollar move from strength to strength. Nor has it hurt that as possibly the world’s most open economy, the U.S. marketplace has adjusted and recovered better than any other nation’s since the Great Recession. Indeed, U.S. employment and output have improved to such an extent that the Federal Reserve has moved out front among central banks in adopting a hawkish position on interest rates. A Dozen Mid-February Economic NuggetsFebruary 12th, 2016 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup Spending time in U.S. stock markets lately has not been a walk in the park. Drooping equity prices are a symptom of assorted maladies. The three that stand out most prominently are as follows. First, a great many people are worried about China’s economy and especially the state of its banking sector. There are thought to be way too many shaky loans in danger of crumbling if growth continues to decelerate. The subsequent drop in value of the yuan won’t be pretty. Second, on account of a shockingly low international price for oil, investment in the U.S. energy sector has gone into a tailspin, affecting certain regions of the country more severely than others. And third, the uplift in value of the U.S. dollar is limiting the ability of American manufacturers to win export sales. Some of the nation’s biggest firms are being negatively affected the most. Canada’s Construction Material Costs Tell Diverse Stories (Part 2 of 2)January 29th, 2016 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup Following up on the subject of Canadian construction material costs, this Economy at a Glance concentrates on seven graphs. Graph 1: Softwood lumber prices in Canada rose rapidly throughout 2012, but over the past three years, they have stayed mainly flat. The U.S.-Canada softwood lumber agreement (SLA), after being in effect for nine years, was allowed to expire in October of last year. Participants in Canada wanted to see continuation of the SLA under the same terms as originally negotiated. The U.S. industry has been wishing for a re-calibration of provisions. Under the SLA, quotas and/or export taxes were to be imposed on Canadian producers when prices fell below a benchmark range. Individual provinces were allowed to choose their own form of regulation. Additional disputes were argued on several occasions before the London Court of International Arbitration (LCIA). Without the SLA, as shown by the long history of contentious wrangling prior to its 2006 implementation, there is considerable potential for legal action that will disrupt North American lumber markets. Read the rest of Canada’s Construction Material Costs Tell Diverse Stories (Part 2 of 2) Canada’s Construction Material Costs Tell Diverse Stories (Part 1 of 2)January 26th, 2016 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup Similar to the U.S., the price advances of many materials and building products going into the construction process in Canada remain restrained. The +0.3% figure year-over-year (y/y) for total construction − from line 4 of accompanying Table 1 − does, however, incorporate considerable variation at the type-of-structure sub-category level. At this time, a sizable gain in non-residential building material costs (+3.6% y/y), plus a mid-range increase in residential costs (+2.2% y/y), are being offset by a significant decline in engineering/civil costs (-3.2% y/y). The divergent performances result primarily from: 1) demand/supply factors driven by activity levels in each of the three main type-of-structure sub-categories; and 2) different weightings of material inputs to build houses versus office buildings versus roads and highways. The material composition of residential construction has a large forestry component, although domestic lumber prices are also affected by housing starts south of the border. Now it’s the Turn of U.S. Construction Material CostsJanuary 25th, 2016 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup The cost of construction is largely determined by labor and material inputs. The previous Economy at a Glance studied U.S. year-over-year average hourly wages in construction relative to all private sector jobs and other major industries. Expanding the analysis somewhat, the Bureau of Labor Statistics (BLS), in its monthly Employment Situation report, publishes four series on wage rates. Table B3 records average hourly and average weekly earnings for all employees in a range of industries. Table B8 has similar average hourly and weekly earnings information, but only for production and non-supervisory personnel. For construction, the December 2015 year-over-year results were +2.9% (average hourly) and +4.2% (average weekly) from Table B3 and +2.7% (average hourly) and +3.3% (average weekly) from Table B8. To summarize, the earnings results for construction ranged from +2.7% to +4.2% annually. Read the rest of Now it’s the Turn of U.S. Construction Material Costs U.S. Wage Gains: Construction versus other Major Industrial SectorsJanuary 22nd, 2016 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup At the end of 2010, the unemployment rate in the United States was 9.3%. Five years later, as of December 2015, the national jobless figure has been cut nearly in half, to stand at 5.0%. There’s a common lament being heard that the tightening in U.S. labor markets has been overstated because a large bloc of potential workers has given up hunting for a job. Furthermore, so the argument goes, whatever employment improvement has happened isn’t yet leading to better wages and salaries and the economy won’t really build up a head of steam until workers are being paid more, so they can spend more. This Economy at a Glance will look at the percentage changes of year-over-year average hourly earnings for both production and supervisory workers in the private sector as a whole, and for major industrial sectors. Historical data can be readily downloaded from the web site of the Bureau of Labor Statistics (BLS). In the hopes of finding trend lines, the analysis in this EAAG will be limited to the past five years. Read the rest of U.S. Wage Gains: Construction versus other Major Industrial Sectors Non-residential Construction Starts Trend Graphs – December 2015January 19th, 2016 by Alex Carrick, Chief Economist at ConstructConnect
Article source: CMDGroup Clichés are often true and it is the case that a picture can be worth a thousand words. Below are six graphs recording 12-month moving averages of CMD ’s non-residential construction starts. When the value of the current month is higher than for the same month a year ago, the line will turn up; when lower, it will dip. String a couple of similar positive or negative directional changes together over several months and one has a trend. |
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