Article source: ConstructConnect

Among America’s dozen most populous cities, the five with the lowest unemployment rates, according to the latest (i.e., for November 2021) ‘household survey’ conducted by the Bureau of Labor Statistics (BLS), are Atlanta (2.2% not seasonally adjusted/NSA), Phoenix (2.8%), Washington (3.6%), Miami (3.7%) and San Francisco (3.8%).

A low unemployment rate is only half the story, however, when it comes to evaluating whether a city has a vibrant labor market. At least as important is a healthy record of jobs creation.

On that score, Atlanta and Phoenix fare well, with the latter slightly outperforming the former. Jobs growth in Phoenix is currently +5.6% year over year; by comparison, Atlanta is +5.1%.

Miami and San Francisco can also boast of hiring success. Employment in the former is +5.3% y/y, while in the latter, it’s +5.0% y/y.

Washington’s y/y staffing increase of +4.1% is a little below the national ‘all jobs’ rate of +4.5% y/y.

Table 1 takes the labor market analysis beyond just the biggest 12 cities in the nation. Table 1 is based on the results for all 50-plus U.S. metropolitan statistical areas (MSAs) that have populations of at least a million residents.

Read the rest of U.S. and Canadian Best City Labor Markets & their Construction Activity

There is much to discuss in this latest mid-month ‘Nuggets’ report, so let’s dive right in.

• The U.S. seven-day average COVID case count, mainly stemming from the Omicron variant, is currently 807,000. The number is continuing to climb, although at a slower pace than a week or two ago. What are the present seven-day average infection rates in the four biggest-population states? California is at 119,000 and still ascending; Texas is at 69,000 and, likewise, still apparently climbing; New York, 53,000 and down by a quarter from its peak of a week ago; and Florida, 58,000, down by a third from its worst number.

• Canada’s seven-day average COVID case count is 40,000, dipping just a little from its highest point. Ontario and Quebec are currently running about 10,000 cases per day each. In Ontario, that’s a drop of nearly half from peak; in Quebec, it’s a pullback of a third. Alberta’s seven-day average case count is 6,000 and not far off peak. Neighboring B.C. has a case count of just 2,400. The biggest flare-ups of late have been in the relatively small-population provinces of Nova Scotia and Saskatchewan.

• Quebec is adopting the strictest vaccination policy among provinces and states. Premier Legault has announced plans for a special health care tax to be paid by the unvaccinated. In Europe, Austria will be implementing a mandatory vaccination policy on February 1, with steep fines for those who don’t comply. President Macron of France has said he wants to make everyday life for the unvaccinated in his country quite ‘uncomfortable’.

• China, which is experiencing a rapidly aging population due to its earlier (and since abandoned) one child policy, plus an extreme gender imbalance in the country (i.e., there are 34 million more males than females), saw its annual number of births in 2021 contract by -12% vs 2020. ‘Demography’ is how you spell trouble for China over the longer term.

• China’s 2021 ‘real’ (after adjustment for inflation) gross domestic product (GDP) growth has been estimated at +8.1%. The pace of Chinese GDP growth has slowed recently, however, due to insolvency problems among some major residential real estate developers (e.g., Evergrande and others) and renewed outbreaks of COVID contagion in several cities and ports (Tianjin and Dalian). The latter are particularly concerning since they threaten lockdowns, which will compound international supply chain distress. Nevertheless, the Winter Olympics are scheduled to open on Friday, February 4th.

• The U.S. inflation rate in December, defined as the year-over-year change in the all-items Consumer Price Index (CPI), was +7.0%. That’s an enormous increase. It’s sending politicians and central bankers into a kerfuffle, looking for a quick fix, which will surely prove elusive. The ‘core’ rate of inflation omits highly volatile energy and food items, and it was less torrid, +5.5% y/y. The price of gasoline was up by half (+49.6%) y/y.

Read the rest of 12 Mid-January Economic Nuggets

Article source: ConstructConnect

Currently, there’s no letup in the rising tide of construction material costs.

Graph 1 shows that the average year-over-year increase for two material cost indices published along with Producer Price Index (PPI) results by the Bureau of Labor Statistics (BLS) is forging ahead more than twice as speedily as bid prices (i.e., +26.6% y/y vs +12.4%).

Graph 2 showcases that 13 of 15 major construction input indices published by the BLS registered double-digit year-over-year percentage increases in December 2021. After energy-related prices (i.e., +69.5% for asphalt; +67.4% for regular unleaded gasoline; and +54.9% for diesel fuel), the largest gain was +58.9% for steel bars, plates, and structural shapes.

Aluminum mill shapes and copper wire and cable weren’t up to quite the same degree, but +29.8% y/y and +20.7% y/y are nothing to scoff at nonetheless,

Read the rest of Double-Digit Percentage Cost Increases for Construction Materials Persist

Article source: ConstructConnect

The increase in the total number of jobs in the U.S. between the two finishing months of 2021, November and December, according to the latest Employment Situation report from the Bureau of Labor Statistics (BLS), was +199,000.

The U.S. jobs recovery ratio (or ‘clawback’ ratio) with respect to the huge drop in employment that occurred between February and April 2020, is now 84.0%.

U.S. total employment is -2.3% compared with its level in February 2020, which was the last ‘normal’ month before the dire health consequences tied to the coronavirus began kicking the stuffing out of the economy.

The sector adding the most net new jobs in December was ‘leisure and hospitality’, +53,000, with ‘food services and drinking places’ taking on staff to the tune of +43,000. This sector’s likely to see quite a reversal in January, due to the flare up in COVID cases resulting from the Omicron variant.

Read the rest of U.S. and Canada December Jobs Reports Dodged Omicron Shock Waves

Article source: ConstructConnect

Estimates of U.S. ‘real’ (i.e., after inflation) gross domestic product (GDP) growth for this year have generally been revised down recently, by well-known forecasting agencies, from a range between +6% and +7% to a ‘cooler’ +5%. Supply shortages have cut into output levels in many industrial sectors. And bad news about coronavirus variants is putting a damper on re-opening efforts.

The seven-day average coronavirus count in the U.S. is presently 120,000. Delta and Omicron have raised infections from reasonably low levels in the summer to a point where they are now half what they were at their peak in January, at the beginning of this year. That’s super discouraging. We’d all like to put this terrible period of anxiety behind us.

By the way, on a per capita basis, coronavirus cases are about three times greater in the U.S. than they are in Canada. (In the United Kingdom, the case count has now soared as high as it has ever been.)

Read the rest of Mid-December Economic Nuggets, with a Focus on Chemistry

Article source: ConstructConnect

The DJI, S&P 500, NASDAQ and TSX have been setting new record highs in each successive month on a regular basis since early days in the pandemic. Nor did November fail to deliver success on that score once again. In the latest month, new peaks were established by the four major indices.

But towards the end of November, things took a different turn. The upward pressure on interest rates from rapid inflation is one concern that is capturing investors’ attention. Perhaps having even more of a negative impact, however, is the upsurge in coronavirus cases caused by the Delta variant. Plus, there’s the uncertainty over how spreadable and injurious to health will be the Omicron variant.

At the least, the coronavirus is making clear it won’t be easily shoved off the stage or relegated to the chorus. In different iterations, it’s going to keep demanding time in the spotlight. Worry over how this may sideline recovery has made investors wary.

By the end of November, the DJI’s closing value was -5.7% versus its earlier high. The S&P 500 was -3.7%; NASDAQ, -4.2%; and the Toronto Stock Exchange, -5.2%.

More telling, though, have been the month-to-month changes. Table 2 and Graph 4 show results for 14 indices from around the world. Only two of the 14 indices pulled off climbs from October 29th to November 30th, the Shanghai Composite (+0.5%) and NASDAQ (+0.3%).

The index with the worst record month to month in November was Hong Kong’s Hang Seng, -7.5%.

Setting aside the short-term gloom, NASDAQ continues to lead the world in year-over-year gain, at +27.4%, but it’s being closely chased by the iShares pre-emerging markets index, +26.8%, and by the S&P 500, +26.1%.

Next in line for y/y jumps are the Russell 2000, +20.8%, and the TSX, +20.2%.

Up by a fifth, also, is STOXX Europe, +19.3%, although neither the German DAX 30 nor London’s FTSE are doing as well, +13.6% and +12.7% respectively.

Read the rest of Stock Markets Drop Their Bravado in November

Article source: ConstructConnect

According to the latest Employment Situation Report issued by the Bureau of Labor Statistics (BLS), the total number of jobs in the U.S. increased by +210,000 in November.

Frankly, +210,000 is a disappointing figure. Canada’s change in employment in November wasn’t much lower, at +154,000 jobs. And the size of Canada’s labor force is much smaller.

Furthermore, while Canada has recovered all the drop in its total employment level that transpired from February to April of last year, when the initial flare-up of COVID-19 led to a near economy-wide closure, the U.S. has clawed back just 82.2% of its Spring 2020 plunge.

Canada’s jobs ‘claw-back’ ratio of 106.2% means the nation has gone beyond restoring lost employment and is now on a path of extra jobs creation.

Perhaps the biggest difference between the two economies lies in public sector employment. The level of total government-tied jobs in Canada is now higher than before the pandemic.

Read the rest of Not the Best Month for U.S. Employment in November; But Canada Upbeat

Article source: ConstructConnect

In the Spring and Summer of this year, a huge gap opened between construction bid prices that were staying low on a year-over-year basis and material input costs, also y/y, that were soaring into the stratosphere.

Graph 1 shows the comparisons. The top curve records the average gain for two PPI series measuring construction material cost hikes. The bottom curve captures bid prices. The PPI code numbers are WPUIP231000, WPUSI012011 and WPUFD43.

Over the past several months, there’s been some downward adjustment in the materials cost structure. The top curve in Graph 1 descended from its peak, but then it did jog back upwards slightly in October. The bottom curve for bid prices has been increasing, with an especially big jump in the latest month, to +12.3% y/y.

Forestry products is where the first big and outrageous escalation in costs began earlier this year, with softwood lumber prices in May being +161% year over year.

There’s been a sigh of relief at seeing the cost of softwood lumber turn -19.5% y/y in October and -25.3% during the past three months.

This doesn’t mean there will be a corresponding financial break for purchasers of new homes. U.S. sawmills supply only about 70% of the product needed for American homebuilding. Imports from Canada make up almost all the rest and the average tariff on shipments from north of the border has just been doubled from a rounded 9% to a rounded 18%.

Also, not all wood products have seen large price drops. Hardwood lumber and millwork, appearing as line items in Table 2 at the end of this article, are +45.6% y/y and +14.4% y/y respectively.

Also, even with their price retreats, softwood lumber, plywood and particle board/oriented strandboard are currently at levels higher than at any other time this century

Article source: ConstructConnect

The vertical bars in Graph 1 tell the story of housing starts in the U.S. The monthly numbers of actual groundbreakings in units are seasonally adjusted at an annual rate (SAAR). ‘Annualized’ means they are projected from a single month to 12 months.

Graph 1 for the U.S. homebuilding market shows that beginning in April of last year, starts kept climbing in almost every subsequent period out to the end of 2020.

In 2021, however, the height of the vertical bars has stayed about the same. Only March’s 1.725 million units (SAAR) makes much of an impression. The levels in the other nine months of this year have ranged between 1.45 million and 1.65 million units. U.S. housing starts in 2021 have remained elevated but the growth momentum has dissipated.

Graph 2 makes clear that it’s the single-family market in the U.S. that has gone into a skid. From 2015 through the end of 2020 (and disregarding the coronavirus-related slump in the Spring of 2020), starts of ‘singles’ were on a strong upward trajectory. In 2021, they’ve mainly been on a downward slide, although in jagged fashion.

One handy way to look at starts is to compare January-to-October monthly averages (based on SAAR figures) for 2021 versus January-to-October 2020 results. On such a basis, the ‘total’ this year has been +16.3%, with singles at +16.8% and multiples, +15.0%. By regions, it’s been the Northeast at +29.0%, followed by the West, +18.8%; South, +14.6%; and Midwest, +10.8%.

Read the rest of Clock Winds Down on Homebuilding Parties in U.S. and Canada

Article source: ConstructConnect

The Construction-related Plot Twists in U.S. and Canadian Retail Sales

U.S. Retail Sales take Exuberant Route

There are a lot of explanations for why souped-up inflation has become so troubling in recent months. Heading the list is supply shortages.

Graph 1 points out, however, that those supply shortages wouldn’t likely have reared up so glaringly if demand hadn’t veered so markedly from its normal pattern.

Instead, U.S. demand for retail goods has taken off in an unprecedented fashion. The curve for actual retail sales has soared way above a forward extension of the trend line that applied for 11 years from 2009 through 2019.

Moreover, in statistical terms, that trend line is an exceptionally good fit. From 2009 to 2019, there were no great deviations from ‘actuals’ to trend line.

The big jump in the savings rate, resulting from ‘organic’ austerity measures while sheltering at home (i.e., cutbacks in travel, entertainment, etc.), plus income support initiatives, have provided the fuel to stoke up the spending splurge.

It’s noteworthy, though, that the take-off in U.S. retail sales has not been matched in Canada.

Read the rest of The Construction-related Plot Twists in U.S. and Canadian Retail Sales