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By No Means is it the Same Old World (Part 1)

Wednesday, May 4th, 2016

Article source: CMDGroup

I’m writing this article on May 1, but it’s not an April Fools’ joke. Sure, there have been other times in world history, during war or plague, when turmoil has been so intense as to test, to the limits and beyond, the fortitude of mankind and womankind.

Still, I’m not sure humanity has ever before been on the cusp of so many changes that are already, or are on the verge of, shaking up the ways in which we live and interact with one another; and govern our economic and social affairs; and inspire dreams about really and truly astonishing futures.

The notion for writing this article first came to mind on account of six or so major trends that I’m always mulling over when I write about the economy and the construction sector. Upon deeper reflection, the number of discernible seismic shifts quickly expanded to a dozen.

There may well be more. Feel free to contact me if you believe I’ve failed to mention something equally or more important.

The following 12 sections have also been inspired by the question I’m always asking myself and which I know is of prime concern to you as well. What will be the implications for the construction sector?
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A Dozen Mid-April Economic Nuggets

Friday, April 15th, 2016

Article source: CMDGroup

It may just be the calm before another storm, but the economic news seems to have quietened down quite a bit over the last little while. As for the political news, as both the Democrats and Republicans race towards their leadership conventions in a few months, that’s another story.

The pain in the oil sector on account of the deeply depressed price of crude is finally leading to some self-correcting courses of action. In the U.S. and Canada, capital spending plans have been slashed and production levels in the fracking sector significantly reduced. Internationally, Iran isn’t expected to ramp up export sales as quickly as once thought. And other OPEC members, including Saudi Arabia, appear intent on re-imposing a degree of control over their output levels.

The global price of oil may have found a floor near $40 USD per barrel. That’s a lot better than when it was nosediving towards $20. Furthermore, it will still provide car drivers, when they fill up, with gasoline charges that are pleasing bargains. Freeing up money so that it can be spent in other areas will prove especially important as the summer vacation season quickly arrives.

Against this backdrop, there are the following additional ‘nuggets’ to be gleaned from the latest government agency and private sector data releases. The ‘soil’ is rich and the ‘crop’ abundant.

(1) Let’s begin with CMD’s own construction starts statistics. Perhaps the most informative way to look at the numbers is to compare the year so far (i.e., through the first quarter, 2016) with the same time frame in 2015. On such a basis, grand total starts, in ‘current’ (i.e., not adjusted for inflation) dollars, were +7.4%, with major type-of-structure sub-categories performing as follows: residential, +3.7%; non-residential building, +11.8%; and heavy engineering, +5.8%.
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U.S. and Canadian City Long-term Home Start Trends – Proxy for Vitality Part 1

Wednesday, April 13th, 2016

Article source: CMDGroup

While practicing the ‘art’ of economics, sometimes the statistics just fall into your lap.

For example, heading into 2016, it was the consensus opinion among analysts that Ontario and British Columbia would have the best upcoming growth performances among Canada’s ten provinces.

Consequently, there were grins from ear to ear among my fraternity when March’s Labour Force Survey from Statistics Canada showed Ontario with the largest year-over-year increase in jobs at +86,000, with British Columbia not far behind, at +72,000.

No other province was even close. In fact, the sum of Ontario and B.C., at +152,000, was greater than for the country as a whole, +130,000.

The material in this current Economy at a Glance continues in a similar vein. I’ve graphed the relatively long-term history of housing starts, from 1980 to the present, for the major cities in the U.S. and Canada and allowed Microsoft’s Excel to add a trend line.

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A Great Canada Jobs Report for March but Head Scratchers Galore

Friday, April 8th, 2016

Article source: CMDGroup

There’s going to be a lot of cheering about Canada’s March labour market numbers as reported by Statistics Canada. The latest Labour Force Survey shows a month-to-month pick-up in total employment of 41,000 positions and a jobless rate that fell 0.2 percentage points to 7.1% from 7.3% in February.

Furthermore, most of the overall jobs increase (+35,000) occurred in the usually more stable and higher-paying, and thus better quality, full-time category of work as opposed to part-time (+6,000) activities.

Plus, all the boost to employment was provided by the private sector (+65,000), as the public sector downsized slightly (-2,000). Self-employment (-22,000) staged a significant retreat.

Still, there were some real oddities in the rest of the figures.
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U.S. Corporate Profit Growth Stymied by Energy Sector Slide

Tuesday, April 5th, 2016

Article source: CMDGroup

North America’s major stock market indices have taken investors on a ‘theme park’ ride over the past 12 months − as can be seen from Graph 1. More often than not, it hasn’t been much fun.

There were substantial dips for all four indices – Dow Jones Industrials (DJI), the S&P 500, NASDAQ and the Toronto Stock Exchange (TSX) − in September of last year, followed by recovery for the U.S. series, and then another crater in the January-February period of this year.

Canada’s TSX stayed mainly down once it faltered in the fall of last year.

In the most recent month, however, there were notable improvements once again. At the close of trading in March 2016, the DJI, S&P 500 and NASDAQ were all within 1.0% of their levels achieved a year prior.

The TSX moved +4.9% during the month of March, but was still -9.4% year over year.

Worry has centered on the likely performance of corporate profits. It’s well known that in the energy sector, the low price of oil is taking a heavy toll on the revenues of exploration and extraction companies, as well as their service and material suppliers.

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A Bit More Ammunition for a Fed Rate Hike from March’s U.S. Jobs Report

Friday, April 1st, 2016

Article source: CMDGroup

In March, the size of the U.S. labor force rose by nearly 400,000, as many working-age people who were previously on the sidelines jumped back into the job hunt.

As a consequence, the participation rate rose to 63.0%, a climb of 0.3 percentage points since the start of the year’s level of 62.7%.

Both developments are votes of confidence in possible employee prospects. They indicate more out-of-work individuals now feel they have a better shot at finding a welcoming face, corporate or otherwise, to pay them a living.

This notion received a boost from March’s month-to-month gain in the total number of non-farm jobs in the economy, +215,000, as reported by the Bureau of Labor Statistics (BLS).

Furthermore, the total employment increase was widely dispersed among industry categories, with payrolls in ‘education and health’ (+51,000) increasing the most; but with ‘retail trade’ (+48,000) and ‘leisure and hospitality’ (+40,000) not that far behind.

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Applying the High-tech Wizardry of Sparklines to Economic Data

Wednesday, March 30th, 2016

Article source: CMDGroup

Yes, I’m an economist first, but in my secondary role as ‘tech whiz’ – my wife and kids would guffaw at that assertion – I’ve come across an exciting feature of standard Excel spreadsheets that I feel must be shared with you.

Of course, there’s always the danger that I’ve finally clued in to something everybody else has known about for years. However, I’ve asked around and it seems most people aren’t yet aware of a tool called ‘Sparklines’ that is highly worthwhile.

And neat and cool and easy to use.

Let’s suppose you have a ‘wall’ of data, such as appears in Table 1 that accompanies this Economy at a Glance. I’ve included the row numbers and column letters for ease of explanation.

The statistics in cells ‘C2’ diagonally to ‘O22’ are percent changes of U.S. put-in-place construction investment, latest 12-month averages versus previous 12-month averages.
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Retail Sales Story in U.S. and Canada is a Twisty Narrative

Tuesday, March 29th, 2016

Article source: CMDGroup

Obtaining a proper read on retail sales in the U.S. and Canada these days has been made harder  by the sharp drop in gasoline prices, -20.7% year over year south of the border and -13.1% on the north side.

As a result, February’s cash register ‘take’ by gas station operators in the U.S. was -15.6% year over year, while in Canada, in January, it was -7.1%. (Retail sales data from Statistics Canada consistently lags results from the Census Bureau by a month.)

Therefore, U.S. retail sales in February that were +3.1% year over year in total including gas station billings, were a much better +4.8% without them.

Similarly in Canada, an already good jump in total retail sales in January of +6.8% improved to an outstanding +7.3% when sales at the pump were omitted.

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U.S. Housing Starts Forecasts and Long-term Graphs

Thursday, March 24th, 2016

Article source: CMDGroup

CMD’s latest U.S. housing starts forecasts appear in Table 1 of this Economy at a Glance and the patterns for ‘total’, ‘single-family’ and ‘multi-family’ are readily apparent from the three accompanying graphs.

Charts showing the long-term regional results for Northeast, Midwest, South and West can be found in the web version of this story (please provide link). All the graphs include a dotted trend line as provided by Excel.

Huge pent-up demand for U.S. new housing construction has been accumulating since 2007.

That’s ten years, or a decade, with residential groundbreakings in a crater that descended as steep as only about half a million units in 2009. (They pinnacled at 2.1 million in 2006.)

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U.S. Economy Adds Nearly One-quarter of a Million Jobs in February

Monday, March 7th, 2016

Article source: CMDGroup

A significant milestone has just been reached in the U.S. labor market. For the latest week ending February 27th, America’s initial jobless claims figure was less than 300,000 for the 52nd week in a row.

 

That’s a whole year of strong success in keeping the number of people newly unemployed quite low. (In the Great Recession of 2008-2009, the number topped off at 670,000.)

 

Falling below their 300,000 benchmark level, rosy initial jobless claims automatically imply encouraging news from the Employment Situation Report published by the Bureau of Labor Statistics (BLS).

 

The BLS has just reported that in February, the total number of jobs in the U.S. rose by 242,000, where a gain of 200,000 or more is considered bullish.

 

The national unemployment rate stayed below 5.0% at 4.9%, the same as in January. A year ago, it had been 5.5%.

 

In another positive sign, the proportion of working-age people who actively sought employment in February moved a little higher, to 62.9%. This measure is called the ‘participation rate’ and it usually picks up when job prospects are good.

 

(On the flip side, when job prospects are abysmal, people stop looking for work and the result is a ‘discouraged worker’ effect.)

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