WEX Construction Fuel Consumption Index compared with total construction put-in-place.
WEX Inc., a leading provider of corporate card payment solutions, in collaboration with IHS, a leading global source of information and analytics, released results of its WEX Construction Fuel Consumption Index (FCI), which indicated an increase of 5.8 percent in January versus its level at the same time the previous year.
The WEX Construction FCI measures national fuel consumption statistics for the construction industry, which provides an accurate and up-to-date indication of construction activity in the United States.
WEX worked with IHS to capture and analyze transaction data from its closed loop network which includes over 90 percent of the domestic retail fuel locations. With this data, the WEX Construction FCI can be used to identify emerging trends within the construction industry and the national economy.
The indicators were tested at monthly, quarterly and annual frequencies, with the greatest insights produced using the year-over-year percent change of the monthly data. For January 2013, the WEX Construction FCI reported that fuel consumption by U.S. construction companies increased 5.8 percent versus January 2012 and increased 0.4 percent versus the previous month.
Last month’s WEX Construction FCI reflected the nearly flat growth indicated by the seasonally-adjusted index in most of the government’s subsequent construction data releases. Construction spending excluding improvements – a good measure of activity – decreased by 0.6 percent in December; however, private residential construction rose by 1.6 percent. December housing permit statistics were mixed, with total permits increasing by 0.3 percent. Housing starts jumped 12.1 percent in December, to an annual rate of 954,000 ? the highest since June 2008. The construction industry added 28,000 jobs in January, after gaining 30,000 in December, but the gain in employment was not accompanied by a noticeable uptick for the WEX Construction FCI. Total construction put-in-place, which is also released a month later than the WEX Construction FCI, rose by 0.9 percent in December.
According to the IHS analysis, despite the month-to-month mild growth in January for the WEX Construction FCI, the U.S. housing market has shown signs of growth; however, new home sales fell by 7.3 percent in December to an annual rate of 369,000 units. Existing home sales slipped by 1 percent in December and inventories fell to 1.82 million units, which is the lowest since January 2001.
Inventories are lean and dropping because builders are not building enough homes, which is why home prices are rising in most markets today. In turn, higher home prices are bringing more builders into the market. The housing market is expected to continue to improve and outperform the rest of the economy over the next few quarters due to the low level of housing inventory and low interest rates.