construction spending, labor & materials outlook€¦ · nonres totals (billion $, saar), share...
TRANSCRIPT
Construction Spending, Labor & Materials Outlook
NMHC Student Housing Conference
New Orleans, October 2, 2013
Ken Simonson
Chief Economist, AGC of America
Construction is growing, but unevenly 3 trends helping many sectors and regions:
• ‘Shale gale’
• Panama Canal expansion
• Residential revival
3 trends holding down construction growth:
• Government spends less on schools, infrastructure
• Consumers switch from stores to online buying
• Employers shrink office space per employee
2 Source: Author
$0
$400
$800
$1,200
2008 2009 2010 2011 2012 2013
Bill
ion
$
Construction spending (seasonally adjusted annual rate—SAAR )
3 Source: Census Bureau construction spending reports
$0
$150
$300
$450
2008 2009 2010 2011 2012 2013
Bill
ion
$
Private Residential Private Nonres Public
-10%
0%
10%
20%
30%
2011 2012 2013
12
mo
nth
% c
han
ge
Private nonres, residential & public, 1/08-7/13
-10%
0%
10%
20%
30%
2011 2012 2013
12
mo
nth
% c
han
ge
Private Residential Private Nonres Public
Total construction, 1/08-7/13 (billion $)
Latest 1-month change: 0.6% Latest 1-mo: (0.6%) (1.3%) (-0.3%)
Latest 12-month change: 5.2% Latest 12-mo: (17.2%) (2.0%) (-3.7%)
12-month % change, 1/11-7/13 12-month % change, 1/11-7/13
Public
Private Nonres
Private Residential
Private residential spending is still rising—for now
-30%
-15%
0%
15%
30%
45%
60%
75%
2011 2012 2013
12-month percent change in private single- and multifamily spending, 1/11-7/13
Source: Census Bureau construction spending reports 4
Latest 12-mo: MF: 39% SF: 29%
Single-family
Multifamily
Nonres totals (billion $, SAAR), share & 12-month change
7/13 Total Share 7/12-7/13
Nonresidential $560 billion 100 % -1 %
Power (incl. oil & gas structures, pipelines) 89 16 6
Educational 80 14 -10
Highway and street 78 14 -4
Commercial (retail, warehouse, farm) 47 8 2
Manufacturing 47 8 0
Transportation 43 8 11
Health care 42 7 -1
Office 37 7 -2
Sewage and waste disposal 21 4 4
Communication 16 3 -13
Lodging 15 3 30
Other (amusement; water; public safety; conservation; religious): 8% of total -7
5 Source: Census Bureau construction spending report
• Private sector added jobs since 2010, construction only since 1/11
• Construction unemployment fell faster than industry added jobs
• Thus, workers are leaving for other sectors, school, retiring
6,233,000
266,000
-725,000
-1 0 1 2 3 4 5 6 7
Nonfarm empl.
Const. empl.
Const. unem.
In Millions
Change in unemployment & employment (Not seasonally adjusted, August 2010-August 2013)
Construction vs. overall (un)employment, 8/10-8/13
6 Source: BLS employment, unemployment reports
17.3%
9.1% 11.3%
7.3%
0%
5%
10%
15%
20%
25%
August '10 August '13
Construction Total
Unemployment rates (August 2010-August 2013)
Source: BLS state and regional employment report
1%
5%
1%
3%
1%
-5%
17%
1%
8%
10%
3%
5%
-7%
3%
-3%
3%
6%
2%
8%
8%
7%
1%
1%
-1%
-7%
-1%
0.4%
12% -2%
-4%
2%
0.3%
2%
-1%
4%
5%
4%
-3%
2%
4%
HI 12%
6%
VT -4%
CT 5%
RI -5%
DE -4%
NJ 4%
MD 3%
DC -3%
NH 9%
Over -10% -5.1% to -10% -0.1% to -5% 0.1% to 5%
MA 4%
State construction employment change (U.S.: 3.0%) 7/12 to 7/13: 37 states up, 13 + DC down
5.1% to 10%
7
Over 10%
Shading based on unrounded numbers
0%
12-Month Percent Change in State Construction Employment (seasonally adjusted), January 2010-June 2013 Legend Over -10% -5.1 to -10% -0.1% to -5% 0% 0.1% to 5% 5.1% to 10% Over 10%
State 2010 2011 2012 2013
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware*
District of Columbia*
Florida
Georgia
Hawaii*
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland*
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska*
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota*
Tennessee*
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Construction employment, July 2013 vs. peak • US: construction -25% (-1.9 million);
private nonfarm -1% (-1.4 million)
• States: only LA & ND at new peak, 46 states more than 10% below
• Metros: only 19 of 339 at new July peak, not seasonally adjusted
9 Source: Author, from BLS national and state & area employment data (www.bls.gov/ces, www.bls.gov/sae)
F
Peak
Off less than 10%
Off more than 10%
Hardest positions to fill (% of respondents that are having trouble filling)
10 Source: AGC Worker Shortage Survey, Aug. 2013
Professional - any 53%
Project managers/supervisors 49
Estimators 35
Engineers 15
No trouble/not hiring 47
Craft - any 74%
Laborers 35
Carpenters 34
Equipment operators 31
No trouble/don’t employ crafts 26
10%
0%
5%
10%
15%
20%
Spending Total hours worked
% c
han
ge 1
/11
-7/1
3
Construction spending, labor & prices, 1/11-7/13 Spending +19% but jobs only +7%. How do they do it?
• Contractors charging slightly more: PPI +6% (industrial buildings)
• More hours per worker: aggregate hours +10% (+3% per employee)
• Implication: further spending growth will trigger bigger pickup in hiring
11 Source: Author, from Census Bureau (spending), BLS (employment, hours, PPI)
19%
7%
0%
5%
10%
15%
20%
Spending Employment
% c
han
ge 1
/11
-7/1
3
19% total
6% price change
12% real
Material & labor costs vs. office & highway bid prices, 12/10-8/13
PPI for materials
ECI
NHCCI
PPI for offices
100
102
104
106
108
110
12/10 2011 2012 2013
De
cem
be
r 2
01
0 =
10
0
12 Source: Author, based on Bureau of Labor Statistics for Producer Price Indexes (PPIs) and Employment Cost Index (ECI); Federal Highway Administration for National Highway Construction Cost Index (NHCCI)
Producer price indexes for key inputs, 1/11-8/13 (January 2011=100)
13 Source: Author, based on BLS producer price index reports
80
100
120
140
2011 2012 2013
Steel mill products
80
100
120
140
2011 2012 2013
Copper & brass mill shapes
80
100
120
140
2011 2012 2013
Gypsum products
80
100
120
140
2011 2012 2013
Lumber & plywood
Producer price indexes for key inputs, 1/11-8/13 (January 2011=100)
14 Source: Author, based on BLS producer price index reports
85
100
115
130
2011 2012 2013
No. 2 diesel fuel
85
100
115
130
2011 2012 2013
Concrete products
85
100
115
130
2011 2012 2013
Asphalt paving mixtures & blocks
85
100
115
130
2011 2012 2013
Prepared asphalt & tar roofing & siding materials
Summary for 2013 • Private nonres spending +5 to +10% (vs. 16% in ‘12): more
manufacturing, warehouse, data centers; remodels of hotels, office, retail; flat power, health care, private ed
• Res +15% to +20% (vs. 15% in ‘12): MF very strong, SF ??
• Public: -3 to -6% (vs. -3% in ‘12): highways 0%, ed -5%; federal spending-down; states-level; local-small decline
• Total construction spending: +5 to +10% (vs. 9% in ‘12)
• Materials costs: +1 to +3% Dec.-Dec. (vs. 1.4% in ‘12)
• Labor costs: +2% to +3.5% Dec.-Dec. (vs. 1.6% in ‘12)
• Labor supply: limited craft, professional shortages
15 Source: Author
Trends: 2014-2017 • Total construction spending: +6% to +10% per year
- less SF housing, retail; declining public spending
- new drivers: shale-based gas & oil; Panama Canal widening; more elderly & kids, fewer young adults
• Materials costs: +3% to +8% (vs. 2% to 3% for CPI)
• Labor costs: +2% to + 4%
• Labor supply: widespread shortages possible due to retirements, competition from other sectors, fewer vets
16 Source: Author
AGC economic resources (email [email protected])
• The Data DIGest: weekly 1-page email (subscribe at: www.agc.org/datadigest)
• 5 monthly press releases: national, state, metro employment; spending; PPI
• State and metro data, fact sheets
• Website: http://www.agc.org/Economics
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