Construction Economic News

Broad measures of the economy through mid-February continue to signal that consumer and business conditions overall are doing better than were expected just months ago when many were questioning just what kind of recession to expect in 2023. However, broad measures of economic performance can easily hide the strength or weakness of specific industries, including construction.

During the decade between the Great Recession and the coronavirus pandemic (2010 – 2020), the U.S. economy added an average of 180,000 workers monthly. Had this trend not been interrupted by COVID-19, the United States would theoretically have added nearly 6.5 million new workers during the three-year period ending January 2023, cumulating in a total employed persons count of just over 165 million.

Inventory-to-sales levels can be helpful indicators of where the balance between supply and demand stands for various categories of products. If and when wholesaler and manufacturer inventory levels become bloated, it can lead to lower prices downstream for end-users, including trades and general contractors, as upstream suppliers reduce prices to protect their market share from competitors.

Broad measures of construction material prices have pointed to a sharp slowing of year-on-year price increases for said materials. The Bureau of Labor Statistics Producer Price Index for construction materials which registered 30% and greater annualized price increases between June 2021 and January 2022, marked its first annualized contractionary reading of -2.36% at the end of 2022.

With trillions of dollars on the line and reputations at stake, banks have a strong incentive to accurately gauge the future of the economy. If the economy appears as though it is about to falter, banks have several ways to protect themselves from losing money or even risking their solvency. In short, banks can increase, or tighten, their loan standards, granting loans only to entities that they perceive as being the safest risks and hence more likely to pay back their loans.

U.S. lawmakers are preparing to impose a 200% tariff on Russian aluminum, according to a recent report from Bloomberg News. This tariff would effectively triple the price paid by U.S. importers of Russian aluminum and articles thereof, effectively pricing Russian aluminum out of the U.S. market.

A swell of fiscal results from publicly traded firms at the end of 2022 is just now being released to Wall Street and the public. In the coming weeks, these data will be used to update the future estimates of both revenues and earnings for the rest of 2023 and at least a portion of 2024.

The National Association of Realtors January data release, covering activity for December 2022, pointed to a 10th consecutive month of quickly declining U.S. existing home sales. December’s reading of 4.02 million units was hardly different from the 4.01 million units reading, recorded soon after federally mandated lockdowns forced many title and realty offices to cease normal operations. To find an equivalent period, one must return to the worst depths of the Great Recession in mid-2010 to find a period when existing home sales activity was below the latest recorded level.

TD Economics, a division of Toronto Dominion Bank Group, released its latest Canadian Economic Outlook report on January 10, 2023. In it, the bank forecast an 11.7% decline in home prices and an 11% decline in housing starts during 2023. TD’s glum housing outlook is comparable to that of Canadian financial services cooperative Desjardins.

Hourly construction wage data recorded a 5.8% annual gain in December 2022, according to the Bureau of Labor Statistics. Compared to just one month ago, hourly wages rose by 0.42%. In dollar-per-hour terms. These increases represent annual and monthly per-hour gains of $1.80, and $0.15, respectively. These latest readings once again put wage inflation ahead of materials inflation which fell year-on-year to a recent low of 3.3% after increasing briefly by more than 30% YoY in 2021. The history of annualized wage and material cost increases over the years has seen both components successfully contend for the title of leading construction cost driver.