Construction Spending, Labor & Materials Outlook

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1 Construction Spending, Labor & Materials Outlook San Antonio Chapter-AGC June 17, 2016 Ken Simonson Chief Economist, AGC of America

2 Construction spending & employment, $1,250 $1,000 Total spending, Feb. 06 (peak)-apr. 16 billion $, seasonally adjusted annual rate (SAAR) $1.21 trillion $1.13 trillion (6% below peak) Total 9,000 Total employment, Apr. 06 (peak)-may 16 thousands, seasonally adjusted 7,500 6, million 6.6 million Total (14% below peak) $750 Private Residential 4,500 Nonres (9% below peak) $500 Private nonresidential 3,000 Residential (24% below peak) $250 Public 1,500 $ April 2015-April 2016: total private res. 8%, private nonres. 3%, public 1% May 2015-May 2016: total 3.4% residential 5.2%, nonresidential 2.3% Source: U.S. Census Bureau (spending); Bureau of Labor Statistics (employment)

3 Nonresidential segments: 2015 actual, forecast 2015 vs Jan.-April 16 vs Nonresidential total (public+private) 9 % 8 % 6-8% 4-6% Highway and street Power (incl. oil & gas field structures, pipelines) Educational Manufacturing to 0 <0 Commercial (retail, warehouse, farm) Office Transportation Health care Sewage and waste disposal 7 6 Lodging <0 Other--amusement; communication; religious; public safety; conservation; water: 11% of total 11 3 Source: U.S. Census Bureau construction spending report; Author s forecast

4 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%; growth is slowing but should last through 2017 low vacancies, high rent growth encourage investors millennials show continued preference for cities nearly all MF construction is rental, not condo Improvements: 0-10%; Census data is not reliable and shows only a loose relationship to SF spending Source: Author

Population change by state, July 2014-July 2015 (U.S.: 0.79%) decrease 0-0.49% 0.5-0.99% 1.0-1.49% 1.+ 1. 1. 1.9% 0.9% 1.2% 1. 1. 0.9% 0.3% 1.9% -0.02% 2.3% 0.6% 0. 0.3% 0.8% 0.6% 0.2% 0.2% 0.1% 0.

5 Population change by state, July 2014-July 2015 (U.S.: 0.79%) decrease % % % % 0.9% 1.2% % 0.3% 1.9% -0.02% 2.3% 0.6% % 0.8% 0.6% 0.2% 0.2% 0.1% % 0.1% -0.2% 0.3% -0.3% 0.3% % 1.0% 0.8% 0.4% 1.4% 1.2% -0.04% 0.3% -0.1% CT -0.1% DE 1.1% MD 0. NH 0.2% VT -0.1% MA 0.6% RI 0.1% NJ 0.2% DC 1.9% 0.2% HI 0.8% 1.8% % Source: U.S. Census Bureau

6 State construction employment change (U.S.: 3.9%) 4/15 to 4/16: 42 states + DC up, 2 unchanged, 6 down Over -10% -5.1% to -10% -0.1% to - 0% 0.1% to 5.1% to 10% Over 10% 6% 10% 8% 1% -10% 0% 8% -13% 2% - 13% 8% 2% 4% 3% 0% 0. -1% 8% -1% 1% 4% 0.2% 1% CT 4% DE 3% MD NH 6% VT 10% MA 10% RI NJ 2% DC 1% -10% HI 18% 2% 4% Shading based on unrounded numbers Source: BLS state and regional employment report

7 In thousands In thousands 8,000 6,000 4,000 2, Construction Employment in United States, 1/90-4/16 (seasonally adjusted; shading = recessions) Peak: Apr Construction Employment in Texas, 1/90-4/16 (seasonally adjusted; shading = recessions) -14% vs. peak Peak: Dec Source: BLS

8 Change in construction employment, 4/15-4/16 not seasonally adjusted (NSA) Metro area or division 12-mo. empl. change (NSA) Rank (out of 358) Metro area or division 12-mo. empl. change (NSA) Rank (out of 358) Statewide (Construction only) 2% Laredo* -9% 348 Statewide* (Const/mining/logging) -4% Longview* -2% 296 Abilene* 2% 193 Lubbock* 0% 236 Amarillo* 3% 169 McAllen-Edinburg-Mission* -3% 307 Austin-Round Rock* 11% 24 Midland* -8% 342 Beaumont-Port Arthur* -2% 296 Odessa* -11% 353 Brownsville-Harlingen* 0% 236 San Angelo* -2% 296 College Station-Bryan* 118 San Antonio-New Braunfels 3% 169 Corpus Christi* 2% 193 Sherman-Denison* 3% 169 Dallas-Plano-Irving Div.* 4% 145 Texarkana, TX-AR* 13% 16 El Paso* 73 Tyler* -2% 296 Fort Worth-Arlington Div.* -1% 293 Victoria* Houston-The Woodlands-Sugar Land 3% 169 Waco* 9% 40 Killeen-Temple* 1 10 Wichita Falls* -3% 307 *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. Source: AGC rankings, calculated from BLS state and area employment reports

9 Construction employment change by TX metro, 4/15-4/16 Amarillo El Paso Odessa Lubbock Mid land San Angelo Abilene Wichita Falls Fort Worth- Arlington Div. Austin- Round Rock- San Antonio- New Braunfels Sherman- Denison Waco Killeen- Temple Dallas- Plano- Irving Div. Victoria College Station- Bryan Tyler Houston-The Woodlands- Sugar Land Texarkana, TX-AR Longview Beaumont- Port Arthur Over 10% 5.1% to 10% 0.1% to 0% -0.1% to % to -10% Over -10% Laredo Corpus Christi Shading based on unrounded numbers McAllen-Edinburg-Mission Brownsville-Harlingen Source: BLS state and regional employment report

10 Hardest positions to fill % of respondents who are having trouble filling (U.S. %/TX %) ALL Hourly craft professionals Carpenters Sheet metal installers Concrete workers Electricians [VALUE]/82% [VALUE]/6 [VALUE]/64% [VALUE]/69% [VALUE]/68% ALL Salaried professionals Project mgrs/supervisors Estimators Engineers [VALUE]/52% [VALUE]/52% [VALUE]/40% [VALUE]/21% 0% 2 50% 7 100% Source: AGC Member Survey, Sept. 2015

11 Summary for 2015, forecast 2015 actual 2016 yr-todate forecast Total spending 11% 9% 6-9 % 5- Private residential 13% 9% 5-10 % 5-8% nonresidential 12% 10% 5-10 % 5-8% Public 6% 6% 3-5 % 2-4% Goods & serv. inputs PPI -2% -2% 0-2 % 0-2% Employment cost index 2.2% 2.3% 3-4 % 3-4. Source: actuals: Census, BLS; forecasts: Author s estimates

AGC economic resources (email simonsonk@agc.

12 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:

Texas Mid-Year Economic Outlook: The Skies are Beginning to Clear Keith Phillips Assistant Vice President and Senior Economist

Texas Mid-Year Economic Outlook: The Skies are Beginning to Clear Keith Phillips Assistant Vice President and Senior Economist The views expressed in this presentation are strictly those of the presenter