The current and future economy, trends in design and construction, political influence – sometimes we have something to say about topics which may be signs of things to come.

Construction input costs outpace new building PPIs; more price hikes appear imminent

Editor’s note:  Construction Citizen is proud to partner with AGC America to bring you AGC Chief Economist Ken Simonson's Data DIGest. Check back each week to get Ken's expert analysis of what's happening in our industry.

The producer price index (PPI) for final demand in January, not seasonally adjusted, increased 0.5% from December and 1.6% year-over-year (y/y) from January 2016, the Bureau of Labor Statistics (BLS)  reported today. AGC posted tables and an explanation focusing on construction prices and costs. Final demand includes goods, services and five types of nonresidential buildings that BLS says make up 34% of total construction. The PPI for final demand construction, not seasonally adjusted, climbed 0.3% for the month and 1.3% y/y. The PPI for new nonresidential building construction—a measure of the price that contractors say they would charge to build a fixed set of five categories of buildings—rose 1.4% y/y. Changes ranged from 0.8% y/y each for industrial and school building construction to 0.9% for health care buildings, 1.9% for office buildings and 2.0% for warehouses. PPIs for new, repair and maintenance work on nonresidential buildings ranged from 0.8% y/y for electrical contractors to 0.2% for plumbing contractors, 2.0% for roofing contractors and 4.1% for concrete contractors. The index for inputs to construction—excluding capital investment, labor and imports—comprises a mix of 59% goods (including 5% for energy) and 41% services (including trade services, 26%; transportation and warehousing, 4%; and other services, 10%).    Read more » about AGC's Data DIGest: February 6-14, 2017

The following article originally appeared in the February newsletter to clients of Kiley Advisors, now a part of FMI Corporation, for the purpose of providing the latest leading indicators and industry issues to those clients.  Reprinted with permission.

Houston managed to squeak through 2016 with a net job growth of 14,800 jobs. For what many economists have stated is the worst recession to hit Houston in decades, that is a major achievement for our region and a testament to the diversification of our city.

Thanks to our ever-growing Port of Houston and Texas Medical Center, and the heavy industrial boom on the east side of town, Houston was buffered from a more severe downturn. However, companies were also quicker to act. Right-sizing and making the difficult decisions early. Breaking the bone to ensure it resets itself right the first time.   Read more » about Houston’s Monthly Metrics: February 2017

Employment rises in January; spending slips in December; recent pay trends are mixed

Editor’s note:  Construction Citizen is proud to partner with AGC America to bring you AGC Chief Economist Ken Simonson's Data DIGest. Check back each week to get Ken's expert analysis of what's happening in our industry.

Nonfarm payroll employment in January increased by 227,000, seasonally adjusted, from December and by 2,343,000 (1.6%) year-over-year (y/y), the Bureau of Labor Statistics (BLS) reported today. The unemployment rate inched up to 4.8% from 4.7% in December. Construction employment (6,809,000) increased by 36,000 from the upwardly revised December total to the highest level since November 2008 and rose by 170,000 (2.6%) y/y. Average hourly earnings in construction increased 3.2% y/y to $28.52, or 9.7% higher than the average for all private-sector employees ($26.00 a y/y gain of 2.5%).   Read more » about AGC's Data DIGest: Jan. 30-Feb. 3, 2017

An article by Johnny Magdaleno which was published in Next City last month offers reactions by representatives from the Workers Defense Project and Workforce Solutions Capital Area to a report by personal finance website NerdWallet which listed Austin, Texas as “the best place to search for a job in 2017.”

The Austin area is indeed growing its employment opportunities in technical fields with the opening of Apple’s new campus and the promised funding by Microsoft, Google, and IBM for internships for low-income job seekers and veterans through the TechHire initiative.

However, workers in the construction, restaurant, and other service industries are not all finding the same job growth opportunities.   Read more » about Austin, Texas: Best City for Job Seekers?

Employment rose in 32 states in 2016; materials costs climb; yearend Dodge starts slip

Editor’s note:  Construction Citizen is proud to partner with AGC America to bring you AGC Chief Economist Ken Simonson's Data DIGest. Check back each week to get Ken's expert analysis of what's happening in our industry.

Seasonally adjusted construction employment rose in 32 states from December 2015 to December 2016 and fell in 18 states and the District of Columbia, an AGC analysis of Bureau of Labor Statistics (BLS) data released on January 23 showed. Nevada again led in percentage gain (15%, 11,000 jobs), followed by Oregon (9.0%, 7,600), Iowa (8.3%, 6,900), Minnesota (8.0%, 9,300), Washington (7.6%, 13,500) and Colorado (7.0%, 11,000). Florida  added the most jobs (22,300 jobs, 5.1%), followed by California (20,900, 2.8%), Washington, Nevada and Colorado. Illinois lost the most jobs (-9,700 jobs, -4.5%), followed by New York (-7,800, -2.1%), Alabama (-6,100, -7.4%) and Kentucky (-5,000, -7.4%). Alabama and North Dakota (-7.4%, -2,400 jobs) had the steepest percentage loss, followed by Kansas (-6.8%, -4,200) and Kentucky.    Read more » about AGC's Data DIGest: January 20-27, 2017

The presidential election of November 2016 represents an historic change in the United States, producing a new President-elect, Donald J. Trump, who has proposed policies to “Make America Great Again.” Those policies include controlling immigration, renegotiating trade agreements, raising defense spending (of the U.S. and its allies), cutting personal and corporate tax rates, increasing energy independence, reducing regulation, and spending up to $1 Trillion to rebuild U.S. infrastructure. All or any combination of these, could potentially have a powerful impact on our future.

A review of the construction outlook for chemical plants, LNG terminals, gas plants, refineries, and transmission and distribution for oil and gas leads us to believe, despite abundant uncertainty, that the proposals of President-elect Trump improve the prospects for industrial construction almost across the board.

Regulatory changes will encourage the production of natural gas – encouraging investment in chemical plants, natural gas liquefaction facilities, refineries, and natural gas plants – even though increased capital costs, due to higher interest rates, will somewhat reduce those investments. The outlook for pipelines is better, since the Trump Administration will promote the Keystone North project and encourage the production and utilization of domestic oil and natural gas.   Read more » about The Trump Effect on Industrial Construction

ConstructConnect, ABI, Beige Book signal positive, but mixed, outlook for starts

Editor’s note:  Construction Citizen is proud to partner with AGC America to bring you AGC Chief Economist Ken Simonson's Data DIGest. Check back each week to get Ken's expert analysis of what's happening in our industry.

The value of nonresidential construction starts decreased 5.6%, not seasonally adjusted, year-over-year (y/y) from December 2015 to December 2016 but increased 6.8% for the full year, data provider ConstructConnect reported on Tuesday. Nonresidential building starts (66% of the total) slipped 2.3% y/y but expanded by 11% for the full year. Commercial building starts dipped 1.7% y/y but added 11% for the year; institutional building starts, -3.9% y/y and +12% for the year; and the small industrial building starts segment, +0.3% y/y and -13% for the year. Heavy engineering (civil) starts (34% of the total) fell 12% y/y but only 0.5% for the year. The largest subsegments, in descending order of 2016 size, were school/college, down 9.7% for the year; road/highway, up 1.6%; water/sewage, up 6.8%; and retail/shopping, up 25%.

The Architecture Billings Index (ABI) score in December soared to 55.9, seasonally adjusted, the highest one-month reading since July 2007, and a large leap from November's mark of 50.6, the American Institute of Architects reported on Wednesday. The ABI measures the percentage of surveyed architecture firms that reported higher billings than a month earlier less the percentage reporting lower billings; any score over 50 indicates billings growth. Read more » about AGC's Data DIGest: January 16-19, 2017

The following article originally appeared in the January newsletter to clients of Kiley Advisors, now a part of FMI Corporation.  Reprinted with permission.

We begin 2017 with optimism and excitement. We have been able to “walk our talk” about executing the right succession plan. As of January 1st, we become part of the Houston Team of the heralded consulting firm, FMI. The timing is right for us, I am now an octogenarian; Candace, a leading-edge millennial on the springboard of her productive years. They are attracted to my past and her future.

Candace and I are humbled and honored to join our industry’s leading consulting firm. Our mandate is to continue to serve our clients exactly as we have and to help them grow in Houston and Texas. This move gives us the capacity to add significant additional value with FMI’s vast resources of bright people, tailored industry data, and an impressive track record of helping construction companies prosper and grow.   Read more » about Practicing What We Preach: Successful Succession

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