U.S. & N.C. Construction Spending, Labor & Materials Outlook · Materials Outlook State...

U.S. & N.C. Construction Spending, Labor & Materials Outlook

State Construction Conference

Raleigh, March 24, 2016

Ken Simonson

Chief Economist, AGC of America

[email protected]

0

1,500

3,000

4,500

6,000

7,500

9,000

2006 2008 2010 2012 2014 2016$0

$250

$500

$750

$1,000

$1,250

2006 2008 2010 2012 2014 2016

Total spending, Feb. ‘06 (peak)-Jan. ‘16 billion $, seasonally adjusted annual rate (SAAR)

Construction spending & employment, 2006-16

Total employment, Apr. ’06 (peak)-Feb. ‘16 thousands, seasonally adjusted

$1.21 trillion $1.14 trillion (5% below peak)

7.7 million

6.6 million

Private Residential

Total

Public

Private nonresidential

Nonres (9% below peak)

Residential (25% below peak)

Total (14% below peak)

January 2015-January 2016: total 10% private res. 8%, private nonres. 11%, public 13%

February 2015-February 2016: total 4.0% residential 6.4%, nonresidential 2.5%

Source: U.S. Census Bureau (spending); Bureau of Labor Statistics (employment)

-20%

0%

20%

40%

60%

2011 2012 2013 2014 2015 2016

12

mo

nth

% c

han

ge

12-month % change: January 2011 (-5.3%)-January 2016 (7.7%)

$0

$100

$200

$300

$400

$500

2011 2012 2013 2014 2015 2016

Bill

ion

$ (

$ B

)

seasonally adjusted annual rate (SAAR): Jan. ‘11 ($238 B)-Jan. ‘16 ($433 B)

Private residential spending: MF continues to outpace SF

Multifamily (MF) (Jan ‘16: $60 B)

Single family (SF) (Jan. ‘16: $230 B)

Improvements (Jan. ‘16: $143 B)

Improvements: 2% Single family: 7%

Multifamily: 30%

Total: 8%

Source: U.S. Census Bureau construction spending reports

2016 residential spending forecast: 5-9%

• SF: 6-9%; ongoing job gains add to demand; student debt, fears of lock-in, limited supply will cap growth

• MF: 8-12%; upturn should last through 2016

– low vacancies, high rent growth encourage investors

– millennials show continued preference for cities

– nearly all MF construction is rental, not condo

– public MF is growing but remains tiny (1% of total)

• Improvements: 0-10%; newly corrected Census data shows loose relationship to SF spending

Source: Author

Population change by state, July 2014-July 2015 (U.S.: 0.79%)

0.2%

1.5%

1.5%

0.9%

1.2%

0.9%

0.3%

1.9%

1.5%

1.9%

-0.02%

2.3%

0.6%

0.7%

0.3%

0.8%

1.8%

0.6%

0.5%

0.3%

0.5%

0.2%

-0.2%

0.1%

0.3%

0.3%

-0.04% 0.3%

0.1%

0.2%

0.1%

0.7%

1.0%

1.2%

1.8%

-0.1%

-0.3%

0.4%

1.7%

HI 0.8%

1.4%

VT -0.1%

CT -0.1%

RI 0.1%

DE 1.1%

NJ 0.2%

MD 0.5%

DC 1.9%

NH 0.2%

decrease 0-0.49% 0.5-0.99% 1.0-1.49%

MA 0.6%

1.5%+

Source: U.S. Census Bureau

0.8%

AGC members’ expectations for 2016

Net % who expect dollar volume of projects to be higher

34% All projects 12% K-12 school

21% Retail/warehouse/lodging 12% Public building

19% Private office 8% Water/sewer

19% Hospital 6% Highway

14% Multifamily 3% Other transportation

13% Higher education 1% Power

-1% Direct federal construction

Source: AGC Construction Outlook Survey, Jan. 2016 (1,580 total responses)

2015 vs. 2014

1/16 vs. 1/15

2016 and 2017 (per year)

Nonresidential total (public+private) 9 % 10 4-8 %

Highway and street 7 34 2 to 5

Power (incl. oil & gas field structures, pipelines) -14 8 5 to 10

Educational 7 12 3 to 6

Manufacturing 44 11 -10 to +10

Commercial (retail, warehouse, farm) 7 1 0 to 5

Office 22 20 5 to 15

Transportation 7 1 0 to 5

Health care 4 2 3 to 8

Sewage and waste disposal 7 1

Lodging 31 35 -10 to +10

Other--amusement; communication; religious; public safety; conservation; water: 11% of total

11 9

Nonresidential segments: 2015 actual, 2016-17 forecast

Source: U.S. Census Bureau construction spending report; Author’s forecast

'14 '15 '16

Power (89% public)

$0

$30

$60

$90

$120

'08 '10 '12

$0

$10

$20

$30

$40

$50

'08 '10 '12 '14 '15 '16

Construction spending: industrial, heavy annual total, 2008-13; monthly, SAAR, 1/14-1/16; billion $

$0

$25

$50

$75

$100

'08 '10 '12 '14 '15 '16

$0

$10

$20

$30

$40

$50

'08 '10 '12 '14 '15 '16

Jan. '15-Jan. '16 change: 8% (oil & gas 28%; electric 1%)

Electric

Oil & Gas

Manufacturing (99% public)

Jan. '15-Jan. '16 change: 11% (chemical 14%; other 8%)

Other

Chemical

Transportation facilities (70% public)

Jan. '15-Jan. '16 change: 1% (private 0.3%; public 1%)

Communication (99% private)

Jan. '15-Jan. '16 change: 27%

Public

Private

Key points: power, mfg., transportation

• Cutbacks in coal-fired plants, oil & gas fields have hit bottom; surge in gas-fired plants, pipelines into ‘18

• Mfg growth led by chemicals (petrochemical plants, ethane crackers, LNG) and transportation equipment (cars, trucks, jets, railcars, barges); but few new starts; cuts in plants tied to farming, mining, exports

• Private (mainly rail) investment in transportation will decline; small gains for public airports, ports, transit

Source: Author

'14 '15 '16

$0

$30

$60

$90

$120

'08 '10 '12

$0

$10

$20

$30

'08 '10 '12 '14 '15 '16

Construction spending: public works annual total, 2008-13; monthly, SAAR, 1/14-1/16; billion $

$0

$10

$20

$30

'08 '10 '12 '14 '15 '16

$0

$10

$20

$30

'08 '10 '12

Highways (99.7% public)


Sewage/waste (99% public)


Amusement & recreation (50% public)

Jan. '15-Jan. '16 change: 17% (private 29%; public 7%)

Water supply (98% public)

Jan. '15-Jan. '16 change: -8%

'14 '15 '16

Public

Private

Key points: roads, recreation, sewer/water

• Small rise in federal highway funding even with long-term bill; gradual pick-up in state funding & P3s

• Amusement & recreation spending is very “lumpy”—a few big stadiums at irregular intervals; but funding for local, state, federal parks keeps eroding

• Eastern & Midwestern cities under orders to make long-term upgrades to sewer systems that should boost spending; water utilities hurt by drought, conservation but may get money for lead abatement

Source: Author

$0

$20

$40

$60

$80

$100

'08 '10 '12 '14 '15 '16

$0

$10

$20

$30

$40

$50

'08 '10 '12 '14 '15 '16

Construction spending: institutional (private + state/local) annual total, 2008-13; monthly, SAAR, 1/14-1/16; billion $

$0

$25

$50

$75

$100

'08 '10 '12 '14 '15 '16

$0

$10

$20

$30

$40

$50

'08 '10 '12 '14 '15 '16

Total education (79% public)


Education (state & local K-12, higher; private)

Latest: state/local preK-12 19%, higher 1%; private 13%

S/L preK-12

Private

S/L higher ed

Total healthcare (78% private)


Hospitals (private, state & local)

Jan. '15-Jan. '16 change: private 18%; state & local -4%

State & Local

Private

Key points: education & health care

• Higher-ed enrollment is shrinking, so colleges need fewer dorms & classrooms; apts. (MF) replacing dorms (ed.)

• PreK-12 enrollment is flat; more children staying in cities and filling underused or charter schools, so construction no longer matches population growth

• Hospitals face more competition from standalone urgent care, outpatient surgery, clinics in stores; more investment in small facilities, short stays

Source: Author

'14 '15 '16

$0

$20

$40

$60

$80

'08 '10 '12

$0

$10

$20

$30

$40

$50

'08 '10 '12 '14 '15 '16

Construction spending: developer-financed annual total, 2008-13; monthly, SAAR, 1/14-1/16; billion $

$0

$20

$40

$60

$80

'08 '10 '12 '14 '15 '16

$0

$10

$20

$30

$40

'08 '10 '12 '14 '15 '16

Retail (private)

Jan. '15-Jan. '16 change: -7%

Office (88% private)

Jan. '15-Jan. '16 change: 20% (private 25%; public -8%)

Public

Private Total

Warehouse (private)


Lodging (private)


Key points: retail, warehouse, office, hotel

• Retail now tied to mixed-use buildings & renovations, not standalone stores or shopping centers; consumer pivot to online buying will continue

• Warehouse market largely built out for now but may heat up if Panama Canal leads to distribution shifts

• Employment sets records each month but office space per employee keeps shrinking; growth mainly in cities & renovations, not suburban office parks

• Ongoing RevPAR gains still driving hotel growth but market is vulnerable to sudden reversals

Source: Author

Seattle

Major locations for data centers

Portland

Silicon Valley

Southern California

Las Vegas

Phoenix

Salt Lake City

Denver

Colorado Springs

Dallas

Houston

Kansas City

Omaha

Minneapolis

Des Moines Chicago

St. Louis

Atlanta

Northern Florida

Northern Virginia

Boston

Philadelphia Northern New Jersey

Source: www.DataCenterKnowledge.com, from CBRE, ASHRAE

0

75

150

225

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1990 1995 2000 2005 2010 2015

In t

ho

usa

nd

s

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4,000

6,000

8,000

1990 1995 2000 2005 2010 2015

In t

ho

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nd

s Construction Employment in United States, 1/90-1/16

(seasonally adjusted; shading = recessions)

Construction Employment in North Carolina, 1/90-1/16 (seasonally adjusted; shading = recessions)

Source: BLS

Peak: Apr. ‘06 -14% vs. peak

-23% vs. peak Peak: Jun. ‘07

-20%

-15%

-10%

-5%

0%

5%

10%

2008 2010 2012 2014 2016

12

-mo

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% c

han

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Construction Employment Change from Year Ago 1/08-1/16 (not seasonally adjusted)

North Carolina 6.7% (42 out of 51)

U.S. 4.1%

Source: BLS

Over -10%

-5.1% to -10%

-0.1% to -5%

0.1% to 5%

Construction employment change by NC metro, 1/15-1/16

5.1% to 10%

Over 10%

Shading based on unrounded numbers

0%

Source: BLS state and regional employment report

Asheville

Hickory- Lenoir- Morganton

Burlington

Charlotte- Concord- Gastonia, NC-SC

Durham- Chapel Hill

Fayetteville

Greensboro- High Point

Greenville Raleigh

Rocky Mount

Wilmington

Myrtle Beach-Conway- North Myrtle Beach, SC-NC

Virginia Beach- Norfolk- Newport News, VA-NC

Winston- Salem

Change in construction employment, 1/15-1/16 not seasonally adjusted (NSA)

Source: AGC rankings, calculated from BLS state and area employment reports

Metro area or division 12-mo. empl. change (NSA)

Rank (out of 358)

Statewide (construction) 6%

Statewide (Const/mining/logging)* 6%

Asheville* 0% 244

Burlington* 0% 244

Charlotte-Concord-Gastonia, NC-SC* 6% 117

Durham-Chapel Hill* 7% 99

Fayetteville* -2% 294

Greensboro-High Point* 9% 64

Greenville* 0% 244

Hickory-Lenoir-Morganton* 0% 244

Raleigh* 5% 148

Rocky Mount* -5% 316

Wilmington* 2% 214

Winston-Salem* 3% 184

Myrtle Beach-Conway-North Myrtle Beach, SC-NC* 8% 78

Virginia Beach-Norfolk-Newport News, VA-NC* 2% 214 *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.

CT 4%

2%

6%

2%

9%

11%

1%

-2%

9%

5%

8%

-3%

-8%

10%

0.2%

7%

7%

1%

2%

13%

6%

4%

2%

2%

8%

2%

6%

3% 5%

1%

8%

-0.2%

4%

5%

7%

3%

-7%

11%

5%

HI 16%

7%

VT 5%

MD 4%

DC 3%

NH 2%

Over -10% -5.1% to -10% -0.1% to -5% 0.1% to 5%

MA 7%

State construction employment change (U.S.: 4.2%) 12/14 to 12/15: 44 states + DC up, 6 down

5.1% to 10% Over 10%

Shading based on unrounded numbers

0%

Source: BLS state and regional employment report

1% NJ 7%

DE 10%

RI -1%

4%

Hardest positions to fill

34%

43%

55%

52%

60%

63%

65%

73%

79%

0% 25% 50% 75% 100%

Engineers

Estimators

Project mgrs/supervisors

ALL Salaried professionals

Electricians

Concrete workers

Sheet metal installers

Carpenters

ALL Hourly craft professionals

% of respondents who are having trouble filling

Source: AGC Member Survey, Sept. 2015

4%

23%

23%

48%

16%

23%

29%

56%

0% 10% 20% 30% 40% 50% 60%

Paying more overtime

Increasing contributions/benefits

Providing incentives/bonuses

Raising base pay

Increasing compensation

Hourly

Salaried

How contractors are coping with worker shortages

0% 10% 20% 30% 40% 50% 60%

Building information modeling (BIM) 7%

Unions 9%

Offsite prefabrication 9%

Lean construction 13%

Labor-saving equipment, tools, machinery 19%

Staffing company 33%

Subcontractors 43%

Increasing use of:

Source: AGC Member Survey, Sept. 2015

Unemployed construction workers, Dec. 2000-Dec. 2015 (not seasonally adjusted)

0

300,000

600,000

900,000

1,200,000

1,500,000

1,800,000

2,100,000

2000 2002 2004 2006 2008 2010 2012 2014

Source: BLS monthly employment situation report

75

100

125

150

2011 2012 2013 2014 2015 2016

75

100

125

150

2011 2012 2013 2014 2015 2016

75

100

125

150

2011 2012 2013 2014 2015 2016

75

100

125

150

175

2011 2012 2013 2014 2015 2016

Flat glass

Producer price indexes for key inputs, 1/11-1/16 (Jan. 2011=100)

Source: Author, based on BLS producer price index reports

Copper & brass mill shapes

Aluminum mill shapes

Latest 1-mo. change: 3.9%, 12-mo.: -2%

Latest 1-mo. change: 1.1%, 12-mo.: 6%

Latest 1-mo. change: -1.6%, 12-mo.: -18%


Gypsum products

75

100

125

150

2011 2012 2013 2014 2015 2016

75

100

125

150

2011 2012 2013 2014 2015 2016

75

100

125

150

2011 2012 2013 2014 2015 2016

75

100

125

150

2011 2012 2013 2014 2015 2016

Paving mixtures

Producer price indexes for key inputs, 1/11-1/16 (Jan. 2011=100)

Source: Author, based on BLS producer price index reports

Concrete products

Steel mill products



Latest 1-mo. change: 0.3%, 12-mo.: 3%


Diesel fuel

Summary for 2014-15, 2016-17 forecast

Source: 2014, 2015: Census, BLS; 2016-17: Author’s ests.

2014 actual

2015 actual

2016-17 annual average

forecast

Total spending 9.6% 10.5% 6-10 %

Private – residential 14.4% 12.8% 5-10 %

– nonresidential 11.3% 11.9% 5-10 %

Public 1.9% 5.7% 2-5%

Materials PPI -0.9% -4.0% 0-2 %

Employment cost index 1.8% 2.2% 3-4.5 %

AGC economic resources (email [email protected])

• The Data DIGest: weekly 1-page email (subscribe at http://store.agc.org)

• monthly press releases: spending; PPI; national, state, metro employment

• state and metro data, fact sheets: www.agc.org/learn/construction-data

• Webinars: May 5 w/ Kermit Baker, AIA; Alex Carrick, CMD

mailto:[email protected]

http://store.agc.org/

http://www.agc.org/learn/construction-data



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