Construction Spending, Labor & Materials Outlook

Transcription

1 Construction Spending, Labor & Materials Outlook Carolinas AGC Winter Meeting Nassau, Bahamas, February 5, 2015 Ken Simonson Chief Economist, AGC of America

2 Construction spending & employment, Total spending, Jan Dec billion $, seasonally adjusted annual rate (SAAR) $1,250 $1,000 $750 $500 $ Total employment, Jan Dec thousands, seasonally adjusted 12/14: $982 bil. 12/14: 6,166,000 7,500 6,000 4,500 3,000 1, month % change, Jan Dec % 15% 0% -15% -30% Total (12/13-12/14: 2%) Res (-4%) Private Nonres (5%) Public (7%) 12-month % change, Jan Dec % 0% -10% -20% Total (12/13-12/14: 4.9%) Residential (6.0%) Nonresidential (4.3%) Source: BLS, Census Bureau construction spending reports 2

3 Construction is growing, but unevenly 3 trends helping many sectors and regions: Shale gale continuing despite oil price plunge 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 3

4 One (or many) bright spot(s): the shale gale Bakken Marcellus Niobrara Permian Haynesville Eagle Ford Source: U.S. Energy Information Administration 4

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; NG-powered vehicles Losers: coal; maybe wind, solar, nuclear & their suppliers Source: Author 5

6 U.S. ports affected by Panama Canal expansion Seattle & Tacoma Columbia River at Mouth, OR & WA NY-NJ Oakland Baltimore Los Angeles/ Long Beach San Diego Houston Mobile New Orleans Norfolk Charleston Savannah Jacksonville Miami Source: U.S. Army Corps of Engineers 6

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 7

8 Billion $ Private residential spending: MF still soaring, SF slowing $450 Private residential spending, Jan December 2014 (billion $, SAAR) $375 $300 $225 $150 $ Multifamily (MF) Single family (SF) Improvements 12 month % change 12-month % change, Jan December % 45% 30% 15% 0% -15% -30% Multifamily: 27% Single family: 11% Total: -4% Improvements: -31% Source: Census Bureau construction spending reports 8

9 Housing outlook SF: rising for now but tight credit, fear of lock-in, demographic shifts may limit increases MF: Upturn should last through 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 remains weak Improvements: down in 14 but should track SF sales Source: Author 9

10 Population change by state, July 2013-July 2014 (U.S.: 0.75%) decrease % % % 1.5%+ 1.3% 1.1% 1.7% 1.0% 1.3% 1.5% 1.4% 0.9% 0.2% 1.6% -0.1% 2.2% 0.9% 0.7% 0.3% 0.6% 0.6% 0.3% 0.3% 0.1% 0.5% 0.05% 0.2% -0.1% 0.4% -0.2% 0.3% 0.7% 0.3% 0.8% 1.0% 0.3% 1.3% 0.1% 0.3% 1.0% 0.1% CT -0.1% DE 1.1% MD 0.6% NH 0.3% VT -0.05% MA 0.5% RI 0.2% NJ 0.3% DC 1.5% -0.1% HI 0.8% 1.7% 0.4% 1.5% Source: U.S. Census Bureau News

11 Nonresidential segments: 2014 total & 2015 forecast 2014 total 2014 vs forecast Nonresidential $606 billion 7 % 4-8 % Power (incl. oil & gas structures, pipelines) Highway and street to -5 Educational to 5 Commercial (retail, warehouse, farm) to 5 Manufacturing Office Transportation to 5 Health care to -5 Sewage and waste disposal 23 4 Lodging Amusement & recreation 17 7 Other (communication; water; public safety; conservation; religious): 8% of total -2 Source: Census Bureau construction spending report; Author s forecast

12 Construction spending: industrial, heavy (billion $, SAAR) Power (88% private) $120 $90 $60 $30 Latest 12-mo. change: -8% (private -8%; public -13%) Transportation facilities (69% public) $60 $45 $30 $15 Latest 12-mo. change: 9% Manufacturing (99% private) $60 $45 $30 $15 Latest 12-mo. change: 18% Public & private transportation facilities $60 $45 Public $30 $15 Private Latest 12-mo. change: private 6%; public 11% Source: Census Bureau construction spending reports 12

13 Construction spending: public works (billion $, SAAR) $90 Highways (99.3% public) $30 Sewage/waste (99% public) $60 $20 $30 $10 Latest 12-mo. change: 11% Latest 12-mo. change: 11% Amusement & recreation (53% public) $30 $20 $10 $30 $20 $10 Water supply (96% public) Latest 12-mo. change: 12% Latest 12-mo. change: 10% Source: Census Bureau construction spending reports

14 Construction spending: institutional (private + state/local) $120 Total education (79% public) $100 $80 $60 $40 $20 Latest 12-mo. change: 4% Education (state & local K-12, higher; private) $100 $80 S/L prek-12 $60 $40 S/L higher ed $20 Private Latest: state/local prek-12 2%, higher 13%; private -1% Total healthcare (75% private) $50 $40 $30 $20 $10 Hospitals (private, state & local) $50 $40 $30 Private $20 $10 S/L Latest 12-mo. change: -2% Latest 12-mo. change: private -6%; state & local -10% Source: Census Bureau construction spending reports

15 Construction spending: developer-financed (billion $, SAAR) Retail (private) $80 $60 $40 $20 Latest 12-mo. change: -0.3% Office (83% private) $80 Total $60 Private $40 $20 Public Latest 12-mo. change: 18% (private 19%; public 12%) Warehouse (private) $40 $40 Lodging (private) $30 $30 $20 $20 $10 $10 Latest 12-mo. change: 66% Latest 12-mo. change: 18% Source: Census Bureau construction spending reports

16 Major locations for data centers Seattle Portland Minneapolis Boston Silicon Valley Southern California Salt Lake Las City Vegas Phoenix Denver Colorado Springs Des Moines Omaha Kansas City Chicago St. Louis Atlanta Philadelphia Northern Virginia Northern New Jersey Dallas Houston Northern Florida Source: from CBRE, ASHRAE

17 State construction employment change (U.S.: 4.9%) 12/13 to 12/14: 40 states + DC up, 10 down Over -10% -5.1% to -10% -0.1% to -5% 0% 0.1% to 5% 5.1% to 10% Over 10% 10% 2% 8% 4% 7% -3% 13% 6% 1% 2% 8% 26% 5% -3% 3% 6% 0.1% 7% 5% 13% 13% 11% 3% 5% 10% -8% 9% -1% -9% -1% 3% 7% 3% 4% 3% -0.4% 4% CT 1% DE 4% MD 1% NH 7% VT -1% MA 3% RI 6% NJ 1% DC 6% -1% HI -5% 8% 4% 9% Shading based on unrounded numbers Source: BLS state and regional employment report

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19 In thousands In thousands 8,000 6,000 4,000 2, Construction Employment in United States, 1/90-12/14 (seasonally adjusted; shading = recessions) Peak: Apr Construction Employment in North Carolina & South Carolina, 1/90-12/14 (seasonally adjusted; shading = recessions) Peak: Jun Peak: Oct % vs. peak -28% vs. peak -34% vs. peak Source: BLS

20 Construction Employment Change from Year Ago 1/08-12/14 (seasonally adjusted) 12-month % change 10% 5% 0% -5% -10% -15% -20% North Carolina 7.2% (13 out of 51) U.S. 4.9% South Carolina 2.6% (33 out of 51) -25% Source: BLS

21 Construction employment change by NC & SC metro, 12/13-12/14 Virginia Beach- Norfolk-Newport News, VA-NC Asheville Hickory- Lenoir- Morganton Winston- Salem Charlotte- Gastonia- Rock Hill, NC-SC Greensboro -High Point Durham- Chapel Hill Burlington Raleigh- Cary Fayetteville Rocky Mount Greenville Wilmington Over 10% 5.1% to 10% 0.1% to 5% 0% Greenville- Mauldin- Easley Columbia -0.1% to -5% -5.1% to -10% Augusta- Richmond County, GA-SC Charleston- North Charleston- Summerville Over -10% Shading based on unrounded numbers Source: BLS state and regional employment report

22 Change in construction (un)employment, 12/10-12/14 Construction unemployment fell sharply in past 4 years But industry employment rose much less Thus, workers left for other sectors, school, retirement Unemployment rates (Not seasonally adjusted, Dec Dec. 2014) Change in unemployment & employment (Not seasonally adjusted, Dec Dec. 2014) 20% 15% 10% 5% 0% 20.7% 9.1% 8.3% 5.4% December '10 December '14 Construction Total In Millions ,069,000 Decrease in construction unemployment 369,000 Workers who have left industry 700,000 Change in construction employment Source: Author, from BLS

23 12-month change in construction employment and unemployment, Jan (not seas. adjusted) Change in employment (000) Employment gain/loss(-) Unemployment decrease

24 Hardest positions to fill (% of respondents who are having trouble filling) Craft 83% Carpenters 66 Roofers 64 Equipment operators 59 Plumbers 54 Electricians 52 Professional 61% Project managers/supervisors 48 Estimators 32 Source: AGC Member Survey, Sept

25 Construction prices, materials costs, average hourly earnings (AHE) Nonresidential buildings Highways mont h percent change mont h percent change Dec-11 Dec-12 Dec-13 Dec Dec-11 Dec-12 Dec-13 Dec-14 PPI for new nonres buildings Nat Highway Construction Cost Index PPI for inputs to commercial structures PPI for inputs to other nonres (hwy/heavy) AHE for nonres building construction AHE for hwy, street & bridge construction Source: Bureau of Labor Statistics: PPI, AHE; Federal Highway Administration: National Highway Construction Cost Index

26 Producer price indexes for key inputs, 12/10-12/14 (Dec. 2010=100) 140 Steel mill products 140 Copper & brass mill shapes / Latest 1-mo. change: -1.3%, 12-mo.: 0.4% 80 12/ Latest 1-mo. change: -1.3%, 12-mo.: -5% 140 Gypsum products 140 Lumber & plywood /10 12/ Latest 1-mo. change: -3.8%, 12-mo.: 5% Latest 1-mo. change: -1.0%, 12-mo.: 3% Source: Author, based on BLS producer price index reports

27 Producer price indexes for key inputs, 12/10-12/14 (Dec. 2010=100) 140 Diesel fuel 140 Concrete products / Latest 1-mo. change: -14.9%, 12-mo.: -26% 80 12/ Latest 1-mo. change: 0.9%, 12-mo.: 5% 140 Plastic construction products 140 Asphalt paving mixtures & blocks /10 12/ Latest 1-mo. change: -1.0%, 12-mo.: 1% Latest 1-mo. change: 0.2%, 12-mo.: 3% Source: Author, based on BLS producer price index reports

28 AGC members expectations for 2015 Net % who expect dollar volume of projects to be higher 33% Retail/warehouse/lodging 15% Higher education 26% Manufacturing 13% Other transportation 25% Private office 8% K-12 school 24% Water/sewer; also Energy 5% Public building 20% Hospital -6% Marine construction 17% Power -16% Direct federal construction 16% Highway Source: AGC Construction Outlook Survey, Jan (912 total responses)

29 Trends: Total construction spending: +6% to +10% per year less SF housing, retail; flat 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 29

30 Summary for 2013, 2014, forecast 2013 actual 2014 actual Total spending 6% 6% 6-10% Private residential 20% 4% 1-10% nonresidential 1% 11% 1-10% annual average forecast Public -3% 2% near 0 Materials PPI 1.3% -0.9% 0-3%; rare spikes Employment cost index 2.0% 1.8% 2.5-5% Source: : Census, BLS; : Author s ests. 30

31 AGC economic resources ( The Data DIGest: weekly 1-page (subscribe at monthly press releases: spending; PPI; national, state, metro employment state and metro data, fact sheets website: webinars, surveys 31