Construction Spending, Labor & Materials Outlook
description
Transcript of Construction Spending, Labor & Materials Outlook
Construction Spending, Labor & Materials Outlook
Surety Assn. of Ohio/Ohio Contractors Assn.Columbus, September 10, 2014
Ken SimonsonChief Economist, AGC of America
2
2006 2008 2010 2012 20140
1,5003,0004,5006,0007,500
Total employment, Jan. 2006-July 2014thousands, seasonally adjusted
Total (7/13-7/14: 8%) Res (8%) Private Nonres (14%) Public (2%)
2006 2008 2010 2012 2014-30%-15%
0%15%30%
2006 2008 2010 2012 2014-20%
-10%
0%
10%
Total (7/13-7/14: 3.6%)Residential (5.3%)
Construction spending & employment, 2006-14
Source: Census Bureau construction spending reports
12-month % change, Jan. 2006-July 2014
2006 2008 2010 2012 2014$0
$250,000$500,000$750,000
$1,000,000$1,250,000
Total spending, Jan. 2006-July 2014billion $, seasonally adjusted annual rate (SAAR)
7/14: $981 bil.
12-month % change, Jan. 2006-July 2014
7/14: 6,041,000
3
Construction is growing, but unevenly3 trends helping many sectors and regions:• ‘Shale gale’ • Panama Canal expansion• Residential revival, especially multifamily
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
Source: Author
One (or many) bright spot(s): the shale ‘gale’
4Source: U.S. Energy Information Administration
Haynesville
Eagle Ford
Bakken
Marcellus
Niobrara
Permian
5
Shale’s direct and indirect impacts on construction
• Onsite: Each well requires access road, site prep, pad, storage pond, support structures, pipes
• Nearby: Products, water require trucking, rail, pipeline, processing
• Local spending by drilling firms, workers, royalty holders• Upstream: orders for fracking sand, rigs, compressors,
pumps, pipe, tanks, trucks, railcars, processing facilities • Downstream: Petrochemical, power, steel plants; LNG
export terminals, fueling stations; LNG-powered vehicles• Losers: coal; maybe wind, solar, nuclear & suppliers
Source: Author
6
U.S. ports affected by Panama Canal expansion
Source: U.S. Army Corps of Engineers
Baltimore
NY-NJ
Norfolk
Seattle & Tacoma
Charleston San Diego
Oakland
Miami
Savannah Jacksonville
Mobile
Columbia River at Mouth, OR & WA
Los Angeles/ Long Beach
New OrleansHouston
7
Panama Canal expansion’s impacts on construction
• Ports: investing in dredging, piers, cranes, land access• Nearby: Storage, warehouse, trucking, rail facilities• Bridge, tunnel, highway improvements• Inland: possible changes in distribution, manufacturing
Source: Author
8
2011 2012 2013 2014-15%
0%
15%
30%
45%
60%
12 m
onth
% c
hang
e
2011 2012 2013 2014$0
$75,000
$150,000
$225,000
$300,000
$375,000
$450,000
Billi
on $
Private residential spending: MF still soaring, SF slowingPrivate residential spending, Jan. 2011-July 2014 (billion $, SAAR)
Multifamily (MF)
Single family (SF)
Improvements
Improvements: -2%
Single family: 9%
Multifamily: 41%
Total: 8%
Source: Census Bureau construction spending reports
12-month % change, Jan. 2011-July 2014
9
Housing outlook• SF: rising for now but tight credit, fear of lock-in,
demographic shifts may limit increases• MF: Upturn should last into 2015– Vacancy rates near multi-year lows in most cities– Preference for urban living adds to demand– Condos have been slower to revive than rentals– Government-subsidized market likely to worsen
• Improvements: should generally track SF sales
Source: Author
10
7/14 Total 2013 vs. 2012 2014 Forecast
Nonresidential $618billion -1 % 4-8%Power (incl. oil & gas structures, pipelines) 111 -7 10+Highway and street 85 1 0 to -5Educational 79 -8 0 to -5Manufacturing 59 0 10+Commercial (retail, warehouse, farm) 54 8 0 to 5Office 45 0 0 to 5Transportation 42 5 2 to 5Health care 40 -2 0 to -5Sewage and waste disposal 23 -3Amusement & recreation 17 0Lodging 16 25 10+Other (Communication; water; public safety; conservation; religious): 8% of total -2
Nonres segments, 2013 & 2014 forecast (billion $, SAAR)
Source: Census Bureau construction spending report; Author’s forecast
11
2008 2009 2010 2011 2012 2013 2014$0
$10,000
$20,000
$30,000
2008 2009 2010 2011 2012 2013 2014$0
$10,000
$20,000
$30,000
2008 2009 2010 2011 2012 2013 2014$0
$10,000
$20,000
$30,000
2008 2009 2010 2011 2012 2013 2014$0
$30,000
$60,000
$90,000
Construction spending: public works (billion $, SAAR)
Source: Census Bureau construction spending reports
Highways (99.96% public)
Amusement & recreation (56% public)
Sewage/waste (99% public)
Water supply (96% public)
Latest 12-mo. change: 3% Latest 12-mo. change: 3%
Latest 12-mo. change: 12% Latest 12-mo. change: -3%
12
2008 2009 2010 2011 2012 2013 2014$0
$15,000
$30,000
$45,000
$60,000
2008 2009 2010 2011 2012 2013 2014$0
$30,000
$60,000
$90,000
$120,000
2008 2009 2010 2011 2012 2013 2014$0
$15,000
$30,000
$45,000
$60,000
2008 2009 2010 2011 2012 2013 2014$0
$15,000
$30,000
$45,000
$60,000
Construction spending: industrial, heavy (billion $, SAAR)
Source: Census Bureau construction spending reports
Power (88% private)
Transportation facilities (72% public)
Manufacturing (99% private)
Public & private transportation facilities
Latest 12-mo. change: 26% (private 29%; public 4%)
Latest 12-mo. change: 2%
Latest 12-mo. change: 24%
Latest 12-mo. change: private 1%; public 3%
Public
Private
13
2008 2009 2010 2011 2012 2013 2014$0
$20,000$40,000$60,000$80,000
$100,000$120,000 Total education (80% public)
2008 2009 2010 2011 2012 2013 2014$0
$10,000$20,000$30,000$40,000$50,000
2008 2009 2010 2011 2012 2013 2014$0
$20,000$40,000$60,000$80,000
$100,000
2008 2009 2010 2011 2012 2013 2014$0
$10,000$20,000$30,000$40,000$50,000
Construction spending: institutional (private + state/local)
Source: Census Bureau construction spending reports
Total healthcare (74% private)
Education (state & local K-12, higher; private)
Hospitals (private, state & local)
Latest 12-mo. change: -1%
Latest 12-mo. change: -6% Latest 12-mo. change: private -3%; state & local -11%
S/L preK-12
Private
S/L higher ed
S/L
Private
Latest: state/local preK-12 -8%, higher 2%; private -8%
2008 2009 2010 2011 2012 2013 2014$0
$20,000
$40,000
$60,000
$80,000
2008 2009 2010 2011 2012 2013 2014$0
$10,000
$20,000
$30,000
$40,000
2008 2009 2010 2011 2012 2013 2014$0
$10,000
$20,000
$30,000
$40,000
2008 2009 2010 2011 2012 2013 2014$0
$20,000
$40,000
$60,000
$80,000
Construction spending: developer-financed (billion $, SAAR)
Source: Census Bureau construction spending reports
Retail (private)
Warehouse (private)
Office (81% private)
Lodging (private)
Latest 12-mo. change: -1%
Latest 12-mo. change: 55% Latest 12-mo. change: 16%
Latest 12-mo. change: 20% (private 23%; public 8%)
Private
Public
Total
-3%
6%
1%
4%
3%
-1%
4%
13%
-3%
6%
-5%
8%
2%
2%
5%
2%
4%
7%
6%
0.4%
6%
3%
4%
3%
5%
-1%
-6% 2%
1%
1%
7%
3%
5%
3%
11%
4%
-6%
6%
11%
HI-1%
2%
VT6%
CT5%
RI4%
DE13%
NJ-6%
MD5%
DC-1%
NH-3%
Over -10% -5.1% to -10% -0.1% to -5% 0.1% to 5%
MA2%
State construction employment change (U.S.: 3.6%) 7/13 to 7/14: 39 states up, 11 + DC down
5.1% to 10% Over 10%
Shading based on unrounded numbers
0%
Source: BLS state and regional employment report
6%
1990 1995 2000 2005 20100
75
150
225
300
In th
ousa
nds
1990 1995 2000 2005 20100
2,000
4,000
6,000
8,000
In th
ousa
nds
Construction Employment in United States, 1/90-7/14(seasonally adjusted; shading = recessions)
Construction Employment in Ohio, 1/90-7/14(seasonally adjusted; shading = recessions)
Source: BLS
Peak: Apr. ‘06 -22% vs. peak
Peak: Mar. ‘00 -26% vs. peak
17
2008 2009 2010 2011 2012 2013 2014-2000%
-1500%
-1000%
-500%
0%
500%
1000%
12-m
onth
% c
hang
e
Construction Employment Change from Year Ago1/08-7/14 (seasonally adjusted)
Ohio 1.2%37 out of 51
U.S. 3.7%
Source: BLS
18
Change in construction employment, 7/13-7/14 (NSA)
Source: AGC rankings, calculated from BLS state and area employment reports
Metro area or division12-mo. empl.change (NSA)
Rank (out of 339)
Statewide* (Const/mining/logging) 3%Akron* 5% 117Canton-Massillon* 5% 117Cincinnati-Middletown, OH-KY-IN* 6% 94Cleveland-Elyria-Mentor* 20% 6Columbus* 2% 190Dayton* 10% 40Lima* 11% 32Mansfield* 5% 117Sandusky* 0% 224Springfield* 8% 60Steubenville-Weirton, OH-WV* -22% 339Toledo* -2% 278
*The Bureau of Labor Statistics reports employment for construction, mining and logging combined for metro areas in which mining and logging have few employers. To allow comparisons between states and their metros, the table shows combined employment change for these metros. Not seasonally adjusted statewide data is shown for both construction-only and combined employment change.
19
Construction employment change by OH metro, 7/13-7/14
Over -10%
-5.1% to -10%
-0.1% to -5%
0.1% to 5%
5.1% to 10%
Over 10%
Shading based on unrounded numbers
0%
Source: BLS state and regional employment report
20
Construction employment, July ‘14 vs. peak• US: construction -22% (-1.7 million) below Apr. ‘06 peak• States: La., N.D. and Okla. at new peak in 2014, 43 states >
10% below• Metros: only 29 of 339 at new July peak, not seas. adjusted
F
Peak in 2014
Within 10% of peak
>10% below peak
Source: Author, from BLS national and state & area employment data (www.bls.gov/ces. www.bls.gov/sae)
State construction employment: June 2014 vs. trough (since Jan. 2008)
Source: Author, based on BLS 21
* AK, KY, NM, AL are currently at their low.Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
AL
NJ VA
NHNC
WV
SC
MSMO
IL
AR
SD
GAHI
MT
AZVT
MEWY
RI
NY
TNWI
OH
MD
NEPA MI
TX
OR
LA
CT
WAMADE
KSOKIA
IDCO
CA
FL
NV
UT
MN
DCND
NM
Trough date
10% or better0% to 4.9% 5% to 9.9%
% c
hang
e fr
om
trou
gh
AK KY
IN
State construction employment, June 2014 vs. peak
Source: AGC, based on Bureau of Labor Statistics state and regional reports
% c
hang
e fr
om p
eak
Peak Date
-10% or worse -5.0% to -9.9% -0.5% to -4.9% 0% to 4.9% 5% or better
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-70%
-60%
-50%
-40%
-30%
-20%
-10%
0%
10%
AL
AK
AZ
AR
MN
CO
CT
DE
FL
GA
HI
ID
IL
IN
IAKS
KY
LA
VTMDMA
MI
CA
MS
MOWA
NE
NV
WINJ
NM
NY
OR
ND
OH
OK
NC
PA
RI
SC
SD
TN
TX
UT
ME
VA MT
WV
NHWY
Spending +24% but jobs only +10%. How do they do it?• Contractors charging more: PPI +11% (nonresidential buildings)• More hours per worker: aggregate hours +14% (+4% per employee)• Implication: further spending growth will trigger larger pickup in
hiring—but will workers be available?
Spending Total hours worked0%
5%
10%
15%
20%
25%
14%
% c
hang
e 7/
10-7
/14
12% real
Construction spending, labor & prices, 7/10-7/14
Spending Employment0%
5%
10%
15%
20%
25% 24%
10%
% c
hang
e 7/
10-7
/14
24% total
11% price change
Source: Author, from Census Bureau (spending), BLS (employment, hours, PPI)
25
August '10 August '140%
5%
10%
15%
20%
17.0%
7.7%9.5%
6.3%
Construction Total
Change in construction (un)employment, 8/10-8/14
• Construction unemployment fell sharply in past 4 years• But industry employment rose much less• Thus, workers left for other sectors, school, retiring
Source: Author, from BLS
Unemployment rates(Not seasonally adjusted, August 2010-August 2014)
0.00
250,000.00
500,000.00
750,000.00
1,000,000.00
805,000
543,000
Change in unemployment & employment(Not seasonally adjusted, August 2010-August 2014)
262,000Workers who
have left industry
26
Hardest positions to fill(% of respondents who are having trouble filling)
Source: AGC Member Survey, Jan. 2014
Craft
Equipment operators 48%Carpenters 44Laborers 37
Professional
Project managers/supervisors 48%Estimators 41
27
2011 2012 2013 2014100
102
104
106
108
110
112
Dec
embe
r 201
0 =
100
Material & labor costs vs. nonresidential building prices 12/10-7/14
Source: Author, based on Bureau of Labor Statistics for Producer Price Indexes (PPIs) and Employment Cost Index (ECI); Federal Highway Administration for NHCCI
ECI (empl. cost)6/13-6/14: 1.3%
PPI for nonres buildings7/13-7/14: 3.2%
PPI for materials7/13-7/14: 2.0%
12/10
28
2011 2012 2013 201480
100
120
140
2011 2012 2013 201480
100
120
140
2011 2012 2013 201480
100
120
140
2011 2012 2013 201480
100
120
140
Producer price indexes for key inputs, 12/10-7/14 (Dec. 2010=100)
Source: Author, based on BLS producer price index reports
Steel mill products
Gypsum products
Copper & brass mill shapes
Lumber & plywood
Latest 1-mo. change: 0.1%, 12-mo.: 4%
Latest 1-mo. change: -0.3%, 12-mo.: 9%
Latest 1-mo. change: 3.3%, 12-mo.: 3%
Latest 1-mo. change: 0.2%, 12-mo.: 12%
12/10
12/10 12/10
12/10
29
2011 2012 2013 201480
100
120
140
2011 2012 2013 201480
100
120
140
2011 2012 2013 201480
100
120
140
2011 2012 2013 201480
100
120
140
Producer price indexes for key inputs, 12/10-7/14 (Dec. 2010=100)
Source: Author, based on BLS producer price index reports
Plastic construction products
Concrete products
Asphalt paving mixtures & blocks
Latest 1-mo. change: -0.3%, 12-mo.: -1%
Latest 1-mo. change: 0.0%, 12-mo.: 2%
Latest 1-mo. change: 0.5%, 12-mo.: 4%
Latest 1-mo. change: 0.0%, 12-mo.: 2%
Diesel fuel
12/10
12/10 12/10
12/10
30
Best prospects for 2014-15• Multifamily• Manufacturing, esp. petrochemical, oil/gas supply• Oil & gas fields• Pipelines• Warehouses• Lodging (hotels & resorts)• Rail• Data centers
Source: Author
31
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: +1 to +3% (similar to CPI); rare spikes• Labor costs: +2.5% to + 5%• Labor supply: widespread shortages possible due to
retirements, competition from other sectors, fewer vets
Source: Author
32
Summary for 2013, 2014-17
Source: 2012: Census, BLS; 2013-17: Author’s ests.
2013actual
2014forecast
2015-17ann. avg.forecast
Total spending 6% 6-10% 6-10%
Private – residential 20% 8-10% 1-10%
– nonresidential 1% 10-15% 1-10%
Public -3% 1 to -2% 0 or less
Materials PPI 1.3% 1-2% 1-3%; rare spikes
Employment cost index 2.0% 2-3% 2.5-5%
33
AGC economic resources (email [email protected])
• The Data DIGest: weekly 1-page email (subscribe at www.agc.org/datadigest)
• monthly press releases: spending; PPI; national, state, metro employment
• state and metro data, fact sheets• website: http://www.agc.org/Economics• webinars: Nov. 20 (email for details)