Construction Economic News

There are aspects to the current inflation problem that deserve an airing. First, while the U.S. all-items CPI-U increase, often referred to as the headline rate, is +8.3% y/y and the core rate, which leaves out price-volatile food and energy items, is +6.3% y/y, there is another measure that isn’t nearly as extreme.

Large U.S. domestic banks at the start of September 2022 had $1.46 trillion* in commercial and industrial loans outstanding; representing an 18% increase from a year ago. This marks the fastest expansion in C&I loans from the large banks category since 2008.

In the United States, the Federal Reserve has just raised its key policy-setting interest rate, the federal funds rate, into a range from 3.00% to 3.25%. The intent is to cool inflation, which is +8.3% year over year for the Consumer Price Index (i.e., CPI-U, with U standing for urban consumers). The U.S. core inflation rate is +6.3%. Core leaves out price-volatile energy and food items.

There will be a lot riding on the hoped-for success of the U.S. manufacturing sector over the decade-plus ahead if the goals concerning carbon emission reductions by mid-century are to be met. There will need to be tremendously large investments in electric vehicle production line expansions, new EV battery plants, computer chipmaking operations, and in the fabrication of all the building products that will go into renewable electricity generation, utility-sized power storage units, coast-to-coast recharging stations, new hydrogen extraction facilities, and so on.

Much has been made of the efforts by the U.S. Federal Reserve Bank to raise interest rates in order to cool down price inflation without also sending the overall economy into a recession. Achieving this feat will be a considerable task as it requires the right balance of slowing down the various elements of total economic activity, as measured by Gross Domestic Product without sending it into reverse.

The accompanying table records the top 10 project starts in the United States for August 2022.

Clichés are often true and it is the case that a picture can be worth a thousand words.

August Found July To Be Hard Act To Follow ConstructConnect announced today that August 2022’s volume of construction starts, excluding residential work, was $40.0 billion, a decrease of -26.3% compared with July’s figure of $54.3 billion (originally reported as $53.7 billion).

Statistics Canada’s August Labour Force Survey report was a downer. It set out a third straight month of total jobs count decline. In August, the employment step back was -40,000 jobs. In the two preceding months of July and June, the retreats were -30,000 and -43,000 respectively.

ConstructConnect’s Expansion Index, a monthly measure of the dollar value of planned or contemplated construction projects compared to the same month one year ago, for September 2022 was 10% and 20% higher overall in Canada and the United States, respectively.