WEX Inc., a leading provider of corporate 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 6.5 percent in February 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 February 2013, the WEX Construction FCI reported that fuel consumption by U.S. construction companies increased 6.5 percent versus February 2012 and increased 1.6 percent versus the previous month.
Last month’s WEX Construction FCI reflected the consecutive positive year-over-year growth indicated by the seasonally-adjusted index in most of the government’s subsequent construction data releases. Private residential construction rose by 3.3 percent; however, construction spending excluding improvements – a good measure of activity – decreased by 1.8 percent in January.
January housing permit statistics were encouraging, with total permits increasing by 1.8 percent. Meanwhile, housing starts in January dropped by 8.5 percent, to an annual rate of 890,000. Total construction put-in-place, which is also released a month later than the WEX Construction FCI, fell by 2.1 percent in January. In February, the construction industry added 48,000 jobs after gaining 25,000 in January, which coincides with the February increase for the WEX Construction FCI.
According to the IHS analysis, the month-to-month growth in February for the WEX Construction FCI follows a recent uptick in U.S. home sales. New home sales increased by 15.6 percent in January to a 437,000-unit annual rate. Existing home sales rose 0.4 percent in January, while inventories fell to 1.71 million units, which is the lowest since December 1999.
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.