The new Wright Express Construction Fuel Consumption Index (FCI) showed consumption by U.S. construction companies rose 3.9% versus August 2010 and expanded by 1.1% in August. The latest result continues the trend of the index rising on an annual basis in every month of 2011.
Wright Express Corporation (NYSE: WXS), an international provider of business payment processing and information management solutions, in collaboration with IHS (NYSE: IHS), a leading provider of global economic and financial intelligence, has released its inaugural Wright Express Construction FCI.
The Wright Express 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. The construction segment comprises approximately 20% of the Wright Express portfolio of customers.
Wright Express worked with IHS Consulting and Advisory Services to capture and analyze transaction data from its closed loop network of more than 180,000 fuel and vehicle maintenance locations, including over 90 percent of the domestic retail fuel locations and 45,000 vehicle maintenance locations. With this data, the Wright Express Construction FCI can be used to identify emerging trends within the construction industry and the national economy.
"The Wright Express Construction Fuel Consumption Index, through our partnership with IHS, taps into our deep well of fuel consumption data for real-time analysis. Each month, beginning with the announcement of the August 2011 data, we plan to release statistics that could be an aide in providing insights around current construction activity and the overall economic landscape," said Michael Dubyak, Wright Express Chairman and Chief Executive Officer.
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.
The Wright Express Construction FCI, which is scheduled to be available in advance of the U.S. Census Bureau of the Department of Commerce figures on construction spending, will be released on a monthly basis going forward and made available at www.wrightexpress.com/fci.
August 2011 Construction Fuel Consumption Index (FCI)
According to the Wright Express Construction FCI, the construction industry appears to be trending upwards as evidenced by the index increase of 3.9% on an annual basis in August. The index has had positive year-over-year growth throughout 2011. Consistent annual fuel consumption growth suggests the construction industry is expanding, albeit rather slowly.
In August, the FCI saw a 1.1% increase over the previous month. Growth in the seasonally adjusted index has been relatively flat in recent months, and this month's result marks the first change of more than 1% since February.
According to IHS's analysis, the August result of the Wright Express Construction FCI is positive news for a market which needs it. Nonetheless, this month's result should be regarded with caution, as the construction market remains fragile and the recovery will be slow. U.S. construction activity is not expected to really pick up until 2012. The residential construction category had been gathering its fundamentals to recover, but financial turmoil in August has deferred the recovery from early to later 2012. Meanwhile, the nonresidential construction category should get better in the first half of 2012, but will be unstable for a few quarters before a clear recovery sets in. Public construction will likely continue to be a drag on the market during 2011 and 2012.