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Catalyst Construction Brief
March 2017


Latest Economic Data

U.S. Census Bureau
Construction Spending
JAN 2017 vs. JAN 2016
Seasonally Adjusted Annual Rate

All Construction Spending:   +3.1%
Public Construction:   -9.0% 
Private Construction:  +7.3%

Quick Analysis: Construction spending for the entire sector was up 3.1% in January 2017 versus the prior year. Public spending continues to drag versus the prior year as it was down a full 9% on a year-over-year basis.

January Sector Highlights (vs. prior year):
Office:+28.8%
Lodging:+22.2%
Commercial:+10.6%
Private Multi-Family:+9.0%
Educational:+4.7%
Private Single-Family: +2.3%    
Manufacturing: -6.9%
Highway & Street:- 10.1%
Water Supply: -10.8%
Sewage & Waste Disposal:-27.7%


ENR Construction Cost Index
MAR 2017 vs. MAR 2016

Total Construction Costs:  +3.9%
Building Cost Index:  +3.0%  
Material Cost Index:  +0.6%
Skilled Labor Costs:  +1.8%
Common Labor Costs:  +3.3% 

Quick Analysis:  Inflation in construction costs continues to be driven by increases in labor costs. Common labor costs are up 3.3% versus the prior year and skilled labor costs are up 1.8%. 

U.S. Bureau of Labor Statistics
February 2017

Construction Unemployment:  8.8%

Quick Analysis: The seasonality of industry unemployment is playing out as it typically does each year on a national basis. Industry unemployment of 8.8% for February is essentially equal to the same level of unemployment reported for February of 2016.

AIA Architectural Billings Index (ABI)
February 2017

Architectural Billings Index (ABI):  50.7
Commercial/Industrial ABI:  48.9
Institutional ABI:  51.8
Residential ABI:  49.3
New Project Inquiry Index (NPII):  61.5

Quick Analysis:  Index value > 50 represents  that architects have reported more activity for that particular metric than the prior month. These metrics are leading indicators as the ABI reflects projects in design that will enter the construction phase in 9 to 12 months and the NPII reflects new project demand from owners to potentially enter the design phase. 

While the ABI was essentially flat, the NPII was significantly above the flat line of 50. These metrics indicate that design billings are flat versus the prior month, but inquires for new design projects are significantly up. The translation: there is a tremendous amount of activity for potential new projects.

ABC Backlog Indicator
4th Quarter 2016

National Avg. Backlog: 8.3  months

On our website's  Construction Economics Hub you can find great detail on average reported backlogs by:
  • Company Size
  • Contractor Type
  • Geography

Quick Analysis: T he ABC reported a slight contraction of average backlog carried by contractors across the country in the 4th quarter. The heavy industrial sector saw the largest drop with backlogs decreasing 16.8% on average on a quarter-over-quarter basis.

The South Region's average reported backlog of 9.6 months is far beyond the backlogs reported in the other three regions (Northeast: 8.4; Middle States: 7.6, West: 6.2). Large companies (>$100 Million of revenue) continue to carry the highest average backlog with an average of 10.8 months of work on hand.

Economic Data Sources
Management Topics
Infrastructure Reform On Deck

With the effort to repeal and replace the Affordable Care Act on hold, the Trump administration has turned their focus to tax reform and infrastructure spending.  Infrastructure was initially projected to be of secondary importance to the administration behind healthcare and tax reform.  It now appears to be on the front burner.

Read Article From The Hill

Related:  
Fires Spark Questions on Wood Construction
 

Subsequent to several mid-rise apartment projects in the midst of construction catching fire in recent months, the safety of wood construction is being examined across the country. The large recent fire in Raleigh has brought the conversation close to home for the Carolinas construction community.
 
Succession Planning


It's no easy task to effectively transition the ownership of your company.  No matter if the transition is to the next generation of family owners or to your key employees, you are bound to encounter some obstacles during the process. This article provides some tips to overcome common problems that arise during an ownership transition.
 
Carolinas AGC Spring Magazine


The Carolinas AGC publishes two magazines each year which help keep contractors in the know about key happenings throughout the Carolinas.  We are consistently impressed with how well this organization supports its members and the overall construction industry.
 
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