Learn more about our agency:  www.catalystsurety.com or   (704) 208-4884.


Catalyst Construction Brief
May 2017


Latest Economic Data

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

All Construction Spending:   +3.6%
Public Construction:   -6.5% 
Private Construction:  +7.0%

Quick Analysis: Construction spending for the entire industry was up 3.6% in March 2017 versus the prior year. Consistent with the trend we have grown accustomed to in the recent past, private spending growth continues to show strength while public sector spending is down materially versus the prior year.

March Sector Highlights:

Year-Over-Year Spending Growth
Office: +15.7%
Commercial: +10.9%
Lodging: +8.3%
Private Multi-Family: +7.4%
Private Single-Family:  +4.7%
Educational: +1.0%

Year-Over-Year Spending Declines
Highway & Street: -2.4 %
Manufacturing: -9.7%
Transportation: -12.3%
Water Supply:  -13.9%
Sewage & Waste Disposal: -22.3%


ENR Construction Cost Index
MAY 2017 vs. MAY 2016

Total Construction Costs:  +3.7%
Building Cost Index:  +3.2%  
Material Cost Index:  +0.7%
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. The Material Cost Index is likely to increase in the coming months given the U.S. tariffs on Canadian soft lumber (lumber is up 11.7% versus last year).

U.S. Bureau of Labor Statistics
APR 2017

Construction Unemployment:  6.3%

Quick Analysis: Industry unemployment for the month of April registered at 6.3%.  This is naturally down from March's unemployment of 8.4% due to the seasonality of construction unemployment in colder climates.  However, industry unemployment of 6.3% for April 2017 is slightly higher than the 6.0% unemployment rate posted a year ago (April 2016).

AIA Architectural Billings Index (ABI)
APR 2017

Architectural Billings Index (ABI):  50.9
Commercial/Industrial ABI:  52.4
Institutional ABI:  54.0
Residential ABI:  49.9
New Project Inquiry Index (NPII):  60.2

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 actual index value is down versus the prior month, the April ABI of 50.9 still represents an increase in total actual billings versus the prior month. Further, the fact that the NPII continues to register at well above the flat line of 50 each month indicates that construction activity should remain strong through 2018 (so long as project funding/financing remains available). 

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
Managing Your Business In Optimistic Times

With a strong year behind the construction industry combined with countless forecasts for fruitful times ahead, it's easy for business owners to be blinded by optimism.  To maximize your company's profit potential during this period, it is key to make decisions based upon facts rather than projections.  FMI recently published a blog post with tips for managing the hidden risks during bullish times.

Read FMI Post

More Details Emerge On  Infrastructure  Plan 
 

The administration's 2018 budget includes $200 billion of public infrastructure spending over ten years. The hope is that these public funds will lead to $800 billion of private spending. The White House also recently released a summary paper providing some more specifics on their infrastructure spending plan.  While it doesn't contain all of the details, it sets the stage for what is likely to come: A battle in congress over allowing tolls to be levied on existing interstates.

 

Protecting Against A Cyber Attack


After this month's broad international cyber attack, it should be clear to every business owner that their business faces a real digital threat each day.  Understanding that exposure and how to mitigate your company's downside is vital for every business in today's business arena.
 


Building The Industry's Workforce


The number one issue that most contractors face in today's environment centers around finding people.  There are many factors driving the labor shortage in the construction industry with no magic bullet that can solve the problem overnight.  This can only be overcome by taking a long-term approach and getting more young people interested in pursuing a career in construction.
 
Within the Carolinas, the Carolinas AGC is leading the charge through a program rolled out earlier this year called Build Your Career.  This program has a mission to "change the image of the industry as a viable career choice."  

 

Who We Are


We've helped 200+ companies since our 2014 launch.  We're ready to help your company when the time comes for you to improve your bonding capabilities.
 

5200 77 Center Dr., Ste 110
Charlotte, NC 28217

(704) 208-4884 / toll free: (866) 630-5060