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WASHINGTON, Dec. 1 – Nonresidential construction spending rose 2.1 percent in October, totaling $717.6 billion on a seasonally adjusted basis, according to an Associated Builders and Contractors (ABC) analysis of data released by the U.S. Census Bureau. The level of spending, however, remains virtually unchanged from a year ago. 

Ten of the sixteen subcategories experienced positive growth, with educational spending topping the list with an increase of 9 percent. Public safety (up 6.8 percent), office (up 5.3 percent) and conservation and development (up 4.3 percent) were the next highest subcategories. Religious (down 3.7%) and amusement and recreation (down 3.5%) spending saw the largest decreases over the previous month.

“One could scarcely imagine circumstances more consistent with rapid growth in nonresidential construction spending,” said ABC Chief Economist Anirban Basu. “The U.S. economy is humming, coming up on two consecutive quarters of 3 percent growth on an annualized basis. Consumers, who have been the driving force of the recovery to date, are more confident than they have been in 17 years.

“Stock prices have surged, due in part to liquidity swirling around the growth,” said Basu. “The worldwide economy has not been this healthy for roughly eight decades and global policymakers continue to pursue pro-growth agendas.  Interest rates remain extraordinarily low, resulting in greater demand for assets that have the capacity to generate significant income, including commercial real estate. On top of this, there are hopes in corporate America for tax reform, which would presumably accelerate economic growth and bolster corporate profitability.

“In October, nonresidential construction spending rose as one might expect given broader macroeconomic dynamics. There were even signs of life in certain publicly financed categories,” said Basu. “It is likely that construction growth will pick up further next year due to numerous factors, including growing confidence among policymakers in rapidly expanding communities. That confidence should translate into more spending on public works. Of course, whether this logic prevails will depend in part on tax reform legislation outcomes in Congress.” 

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WASHINGTON, Dec. 4— In its survey of Florida construction firms for the third quarter of 2017, Associated Builders and Contractors (ABC) finds the confidence to fill open positions over the next six months remains low. Continued hurricane rebuilding efforts will likely exacerbate the challenge to find enough skilled labor in Florida to meet the level of project demand. Confidence in other areas of the survey remains high.

ABC conducts a quarterly construction confidence survey in Florida to supply stakeholders with information regarding contractor perceptions in four areas: 

• Staffing Levels:  Do contractors expect to increase hiring?
• Worker Availability:  Will filling open positions become more challenging?
• Workforce Investment:  Will investment in training expand?
• Sales:  Will revenues rise or fall over the next six months?  

  
The survey supports computations of the Florida Construction Confidence Index (CCI), a diffusion index. Readings above 50 indicate growth or improvement, while readings below 50 are unfavorable. Because response rates are high, ABC is able to provide results for a number of Florida sub-markets.

Florida remains among the nation’s most active construction markets, ranking fifth among all states in terms of net new construction job creation. While CCI in the staffing levels category fell from 76.8 in the second quarter to 74 in the third, the reading continues to indicate that contractors will continue increasing staffing levels over the next six months. A minuscule 2 percent of respondents indicate an expectation that their staffing levels will decline over the near term. 

The same can be said regarding sales expectations. While confidence has waned slightly from the second quarter, contractors remain upbeat from the perspective of anticipated revenue expansion. 

By contrast, worker availability remains a source of pessimism among contractors, with more than 68 percent of respondents indicating that filling positions will become more difficult over the next six months.  This is remarkable given how difficult it has already been to secure skilled craftspeople.  Only 2 percent of respondents indicate that finding workers will become easier over the coming six months.  Given the onset of rebuilding after summer storms, skilled labor shortages are likely to become even more dramatic in late 2017 and into early 2018. 

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On Nov. 28, The Senate Budget Committee voted to advance S.1, the Tax Cuts and Jobs Act on a party line vote of 11-10. Senators Ron Johnson (R-Wis.) and Bob Corker (R-Tenn.) voted to send the bill to the Senate floor after originally withholding their support.

ABC is working diligently on behalf of our members to make sure you are paying a fair and effective tax rate. On Nov. 29, ABC sent an Action Alert to members asking them to urge their Senators to support the Tax Cuts and Jobs Act when it goes to the Senate floor for a vote this week.

Newsline will continue to update readers on any congressional action regarding tax reform.

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WASHINGTON, Nov. 28—The not seasonally adjusted (NSA) national construction unemployment rate was 4.5 percent in October, down 1.2 percent from a year ago, the U.S. Bureau of Labor Statistics (BLS) reported. It was the lowest October rate on record, matching the rate in 2006, according to analysis released today by Associated Builders and Contractors (ABC). Further, the construction industry employed 180,000 more workers than in October 2016. 

Construction unemployment rates were also down in 44 states on a year-over-year basis, unchanged in one (South Dakota) and up in five states.

“Recovery from the various hurricanes that hit the United States appeared to be a major factor in October construction employment. Some northern states that would normally have an increase in their NSA construction unemployment rate had flat or down rates. This is likely due to some construction workers leaving those states to help with hurricane recovery,” said Bernard M. Markstein, Ph.D., president and chief economist of Markstein Advisors, who conducted the analysis for ABC. “The need for construction workers as part of recovery and rebuilding efforts after this year’s devastating hurricanes, floods and wildfires is providing employment for workers who normally would be subject to seasonal layoffs.”

Because these industry-specific rates are not seasonally adjusted, national and state-level unemployment rates are best evaluated on a year-over-year basis. The monthly movement of the rates still provides valuable information, although extra care must be used in drawing conclusions from these monthly movements.

From the beginning of the data series in 2000 through 2016, the monthly movement in the national NSA construction unemployment rate from September to October has recorded a decrease five times and an increase 12 times. This year, the rate was down 0.2 percent from September. Among the states, 25 had decreases in their October estimated rate from September, 21 were up and four (California, Louisiana, Oklahoma and Pennsylvania) had no change. 

The Top Five States

The states with the lowest estimated October NSA construction unemployment rates in order from lowest to highest were:

1. Hawaii, 2 percent
2. Idaho, 2.3 percent
3. Colorado, 2.5 percent
4. Vermont, 2.7 percent
5. Iowa, 2.8 percent

Hawaii’s number one ranking was a jump from 16th lowest in September, tied with Kansas and North Carolina. It was the state’s lowest October rate since the beginning of the estimates in 2000. Further, Hawaii had the largest monthly drop and the fifth largest year-over-year decline in its rate among the states.

Note that Hawaii’s unemployment rate is a rate for construction, mining and logging combined. The data to estimate a construction unemployment rate alone are not available for either Hawaii or Delaware.

Idaho and Colorado, which were in the top five in September, remained in the top five in October. This was Idaho’s lowest October estimated rate on record. Colorado slipped a few spots—it had September’s lowest construction unemployment rate. Nonetheless, this was the state’s second lowest October rate on record, after its 2.2 percent rate in 2000.

Vermont’s fourth place ranking in October was up from the eighth lowest rate in September (tied with Oregon and Virginia). It was the state’s lowest October rate on record, matching its 2014 rate.

Iowa made a big improvement in October. The state had the third largest drop in its rate from September, when it had the 22nd lowest rate. This was also its lowest estimated October rate on record.

North Dakota, which ranked third lowest in September based on revised data (previously reported as the second lowest rate), tied with Massachusetts and Texas for seventh lowest, with a 3 percent October estimated NSA construction unemployment rate. 

Nebraska, which ranked second lowest in September based on revised data (previously reported as the third lowest rate), fell to the 16th lowest rate, tied with Wyoming. Wyoming had the fifth lowest rate in September. 

The Bottom Five States

The states with the highest October NSA construction unemployment rates in order from lowest to highest were:

46. Pennsylvania, 6.4 percent
47. New Jersey, 6.5 percent
48. Illinois, 7.1 percent
49. New Mexico, 8.4 percent
50. Alaska, 15 percent

Three of these states—Alaska, Illinois and New Mexico—were also among the five states with the highest construction unemployment rates in September. Alaska had the highest rate in the nation for the third month in a row. The state also had the largest monthly increase, up 4.8 percent from September, and the largest year-over-year increase, up 1.6 percent.

For the third consecutive month, New Mexico had the second highest rate in the country. It was also the eighth month in a row that the state has had either the highest or second highest construction unemployment rate in the nation. 

Illinois had the third highest estimated NSA construction unemployment rate in October, the same as in September (based on revised data; previously reported as the fourth highest rate). Still, it was the state’s lowest October construction unemployment rate since the 4.7 percent rate in 2006.

New Jersey fell six spots from its September ranking, when it had a 5.7 percent rate (tied with Montana, Ohio and West Virginia). The state’s 6.5 percent construction unemployment rate was its second lowest October rate after last year’s 6.4 percent rate.

There was only slight movement for Pennsylvania, as it dropped one spot from September’s ranking. Nonetheless, this was the state’s lowest October rate since 2006’s 4.4 percent rate. 

Connecticut, which had the fourth highest rate in September (based on revised data, previously reported as the third highest rate), improved to the 14th highest rate in October with a 5.2 percent rate, tied with Delaware and Montana. It was the state’s lowest estimated NSA construction unemployment rate since the 4.7 percent rate in October 2001. It also had the nation’s fourth largest decrease from September, down 1.4 percent.
 
Meanwhile, Rhode Island, which had the fifth highest rate in September, notched up to sixth highest rate in October—6.2 percent. It was the state’s lowest October construction unemployment rate since the 5.6 percent rate in October 2006.

Here is the complete list of the latest state rankings. 

To better understand the basis for calculating unemployment rates and what they measure, see the article Background on State Construction Unemployment Rates.

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2016 CONSTRUCTION SPENDING: TOP FIVE STATES
The fastest growth was in the West and the South. The first state outside of those two regions in the ranking of construction growth rates is Rhode Island with the 16th largest increase (up 4.9 percent). In 2016, the top five states for the increase in their real value added from construction in order from highest to lowest were: 

1. Idaho, up 10.7 percent 
2. Georgia and South Carolina (tie), up 9.4 percent 
4. Florida, up 9.3 percent
5. Oregon, up 9.1 percent

Idaho had the highest percentage contribution from construction, even though state real GDP advanced a respectable, but more modest, 1.8 percent. Georgia slipped from its number-one ranking in 2015, while South Carolina made a significant jump from 17th to second place.

Florida’s ranking of number four is down from second place in 2015 when its real construction spending was 11.1 percent. Oregon saw a big improvement from 33rd place in 2015.

2016 CONSTRUCTION SPENDING: THE BOTTOM FIVE STATES
All of the bottom five states suffered from the effects of low energy prices.

46. Mississippi, down 2.5 percent 
47. West Virginia, down 7.5 percent
48. North Dakota, down 10.5 percent
49. Wyoming, down 11.5 percent
50. Alaska, down 13.2 percent

Alaska has struggled over the last few years. Not only did it experience the largest drop in real private construction spending in 2016, but it also experienced the second largest decrease in state GDP in the nation, down 5 percent. Real private construction spending has been down every year starting in 2011, except for 2015 (up 0.2 percent).

Although Wyoming improved its 2016 ranking—it had the largest decrease in 2015 at 6.6 percent—the 11.5 percent plunge was an acceleration of a bad outcome.  North Dakota had the third largest decline in its real private construction spending in 2016 and 2015, down 10.5 percent and 4.1 percent, respectively. However, the state’s growth in construction spending ranked in the top 10 from 2008 through 2014.

West Virginia had the fourth largest decline in its real private construction spending in 2016 and 2015, down 7.5 percent and 3.1 percent, respectively. Mississippi’s 2016 decrease represents a slowdown in the decline in construction from 2014 and 2015, when private construction activity fell 8.6 percent and 5.6 percent, respectively.

Read the full report here. 

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On Nov. 28, ABC will offer the webinar “DOL Training on Paid Sick Leave for Federal Contractors” at 2 p.m. EDT. The webinar will cover the Paid Sick Leave for Federal Contractors final rule issued by the Department of Labor’s Wage and Hour Division (WHD) on Sept. 30, 2016, which implements President Obama’s E.O. 13706. 

The final rule requires certain federal contractors to offer employees up to seven days (56 hours) of paid sick leave annually, including paid leave for family care. It went into effect on Jan. 1, 2017, and applies to new contracts and replacements for expiring contracts with the federal government that result from solicitations issued on or after Jan. 1, 2017 (or that are awarded outside the solicitation process on or after Jan. 1, 2017).

Representatives from the WHD will lead the webinar and provide training on the final rule’s requirements to assist federal contractors with compliance. ABC members can register here.

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Construction input prices remained unchanged on a monthly basis in October, according to analysis of today’s Bureau of Labor Statistics release by Associated Builders and Contractors (ABC). Overall construction input prices have expanded 4.3 percent year over year, while nonresidential input prices have expanded 4.1 percent since October 2016. Crude petroleum prices rose 6.6 percent for the month and are up 7.7 percent for the year. No other input manifested significant price growth in October.

“The construction industry benefited from a one-month reprieve in materials price increases in October, based on today’s release. The fact that materials prices have stabilized should be viewed as good news to the U.S. construction industry,” said ABC Chief Economist Anirban Basu. “Most stakeholders agree that labor costs will continue to rise as America hurtles toward full employment. Significant increases in materials prices would further squeeze construction firms’ profits margins, or alternatively would make it less likely that planned construction projects would move forward.  

“Still, on a year-over-year basis, some materials prices are up substantially,” said Basu. “A faster growing global economy, combined with China’s commitment to suppress excess steel manufacturing capacity, has helped to produce a nearly 14 percent increase in iron and steel prices over the past year. U.S. trade policy has likely contributed to a greater than 15 percent increase in softwood lumber prices over the past year.   

“Where materials prices will go from here is pure guesswork,” said Basu. “While it is true that the global economy continues to improve, recent increases in commodity prices are likely triggering increases in quantity supplied, at least in certain categories. That supply response should help keep a lid on construction input prices over the next few months even in the context of growing demand for materials globally.”

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On Nov. 13, ABC President and CEO Mike Bellaman participated in the first meeting of the U.S. Department of Labor’s task force on apprenticeship expansion. The task force is responsible for identifying strategies and proposals to expand and promote apprenticeship opportunities. Bellaman is one of twenty members of the task force, joining two governors and leaders from business, associations, labor and education.

“With a significant network of apprenticeship programs nationwide, ABC joins this task force with a win-win attitude,” said Bellaman in his opening remarks. “We are committed to working synergistically to identify strategies and proposals to promote, enhance and expand ‘earn while you learn’ apprenticeship models across the United States.”

The meeting took place on the first day National Apprenticeship Week, Nov. 13-19, during which ABC joined with the business community, labor groups and education leaders to highlight the tremendous job opportunities provided by apprenticeships and industry-recognized training programs. The third annual observance also emphasized the need for an infusion of Americans to pursue a skilled trade and embark on a fulfilling career.

The task force is advisory in nature, and will make recommendations to President Trump after a series of meetings. In his remarks, U.S. Secretary of Labor Alexander Acosta noted that the president would like to see a proposal in, “weeks, not years.”

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On Nov. 7, ABC joined Associated General Contractors, the Leading Builders of America and the National Association of Home Builders in a letter to Congressional leaders expressing the construction industry’s concerns regarding the upcoming decisions related to the Temporary Protected Status (TPS) designations for El Salvador, Haiti and Honduras. The letter urged Congress to take legislative action to ensure that TPS holders can remain and continue to work legally in this country. 

Local businesses and economies need these legally authorized workers from these countries and would be adversely impacted by a failure to extend their status.

Newsline will continue to update readers on any congressional action regarding TPS designations for El Salvador, Haiti and Honduras.

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On Nov. 13, the U.S. Senate began the first day of an expected four-day process to amend and approve their version of tax reform legislation. The U.S. House of Representatives is expected to vote on their version of the bill on Thursday, Nov. 15.  If both chambers pass their respective bills, conferees will be designated to negotiate an agreement between the House and Senate versions, which currently include a number of significant differences. 

ABC is working diligently on behalf of our members to make sure you are paying a fair and effective tax rate. On Nov. 14, ABC sent a letter to the members of the House of Representatives urging them to support the bill, as it will be considered a “key vote” on ABC’s 115th Congressional Scorecard. 

Michael Bellaman, ABC president and CEO, has supported the tax reform efforts on Capitol Hill, releasing a statement on the Tax Cuts and Jobs Act and speaking in favor of the legislation on Fox Business News.

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