U.S. Total Industrial Production [return to nav]
  • IndustrialAverage U.S. Industrial Production during the three months through July was down 11.8% compared to the same three months one year ago.
  • Quarterly production ticked up in July. Trends in the U.S. OECD Leading Indicator and in the U.S. Total Industry Capacity Utilization Rate suggest rise will persist in at least the near term.



U.S. Leading Indicator [return to nav]

  • The Conference Board’s U.S. Leading Indicator rose for the third consecutive month in July.
  • The tentative rising trend in the Leading Indicator monthly growth rate signals business cycle rise for the U.S. industrial sector during 2021.

Leading




U.S. Private Nonresidential New Construction [return to nav]
  • Second-quarter U.S. Private Nonresidential New Construction totaled $118.8 billion, 2.4% below the same quarter one year ago. 
  • Decline in Construction spending is likely to be driven in part by decline in U.S. Corporate Profits for Nonfinancial Industries, which will likely reduce investment in new nonresidential construction projects next year.

Nonres

Construction Machinery, New Orders [return to nav]
  • U.S. Construction Machinery New Orders totaled $31.2 billion during the 12 months through June, down 11.2% from one year ago. Monthly New Orders in June were down a comparatively mild 5.7%.
  • Coupled with corporate profitability struggles, weakness in the construction and mining markets suggests additional decline in New Orders is probable in at least the near term.

Machinery

U.S. Total Public New Construction [return to nav]
  • U.S. Total Public New Construction during the 12 months through June totaled $344.4 billion, up 7.6% from one year ago. Growth is slowing, with second-quarter Construction up 4.2% from the second quarter of 2019.
  • We do not expect significant increases in new construction in the near term as federal, state and local governments allocate resources to providing pandemic assistance and stimulus while faced with budget constraints.Public


U.S. Heavy-Duty Truck Production [return to nav]
  • Annual U.S. Heavy-Duty Truck Production was down 33.7% in July. The severity of year-over-year decline in the monthly data is generally easing; July was down 46.5% from July 2019, milder than the 92.6% decline in April versus 1 year ago.
  • Trends in the US ISM PMI (Purchasing Managers Index) indicate a probable early-2021 cyclical trough for Production.

Trucks


US Housing Starts Soar in June but Covid Resurgence Threatens Progress [return to nav]

Total U.S. housing construction starts rose 17.3% in June, with both single-family and multifamily starts rising to their highest level since March. Starts more than doubled in the Northeast, as builders finally got back on track following a three-month lull. Activity also rebounded in the Midwest, with overall starts rising 29.3%. In the South, which accounts for over half the nation’s overall starts, activity rose 20.2%.June2020 Regional Us Housing Starts

The only regional decline was in the West, where starts fell 7.5%. But that was after leaping 69.8% in May.

Monthly estimates of housing activity issued by the Commerce Department on Friday showed that new homes were started at a seasonally adjusted annual rate of 1,186,000 in June after modest recovery in May followed steep declines in April and March. After a second month of increases, and an upward revision for May, residential construction starts year to date are 0.7% above the same period in 2019.

Applications for building permits, a good indication of future activity, rose 2.1% to 1.24 million units.

An Associated Press story on InvestmentExecutive.com reports there were hopes that the lowest mortgage rates in five decades would drive a housing boom. However, surging Covid-19 infections in the South, typically one of the most active construction markets, has put new projects at risk.

“We look for strong demand, improved homebuilder confidence, and an ongoing shortage of supply to support growth in housing starts over the rest of the year, but downside risks are increasing due to the resurgence in Covid-19 cases,” said Nancy Vanden Houten, lead U.S. financial economist at Oxford Economics. The South and West, which are seeing the largest rise in cases, accounted for about 75% of June housing starts, she said.

“While both single and multifamily starts rose solidly in June, we believe that apartment construction is set to slow,” said Mark Vitner, senior economist with Wells Fargo Economics. He points out that permits issued for multifamily projects fell 13.4% in June and are only slightly above their April low. “Moreover, credit underwriting for new apartment projects has tightened, particularly in higher cost areas that are already slated to see an onslaught of new units.

“Apartment starts are not headed to oblivion, however. Activity is actually picking up in many suburban markets in the Sunbelt. On a year-to-date basis, multifamily starts are up 5.2% from the first six months of last year. Permits for future projects, however, are down 6.9% for the same period.”

Meanwhile, the average 30-year fixed mortgage fell to 2.98% in the week through Thursday, reports TheStreet.com. That's the lowest reading in Freddie Mac’s 50 years of tabulating the data.

This represents the third consecutive week, and the seventh week this year, that the rate on the most popular U.S. home loan has hit a record low. It reflects the plunge in bond yields amid the coronavirus pandemic and the Federal Reserve’s reduction of the federal funds rate to a minuscule zero to 0.25%.

“Momentum is clearly swinging back toward single-family homes,” said Vitner. “The recent drop in conventional mortgage rates below 3% should bring out even more buyers, bolstering builder confidence even further. Homebuilder confidence, which was reported yesterday, had already rebounded before the latest drop in mortgage rates.”

The National Association of Homebuilders/Wells Fargo Housing Market Index (HMI) jumped 14 points in July to 72. The increase was driven by a resurgence in buyers, particularly in the Northeast and Midwest. The HMI for the Northeast jumped 22 points to 70 in July—it was just 17 two months earlier. The HMI also rose 18 points in the Midwest (68), 14 points in the West (80) and 10 points in South (73). Single-family starts jumped 17.2% in June and permits rose 11.8%.

“Both numbers are likely headed higher in coming months, but builders are running into some bottlenecks that will likely limit the extent of gains,” Vitner added. “Lumber prices have jumped up to their highest level in two years. Spot shortages of building materials and labor have also emerged due to prior shutdowns and the resurgence in COVID-19 cases in the South.

“Single-family homebuilding has several potent long-term tailwinds behind it. COVID-19 lockdowns have likely encouraged many apartment dwellers already contemplating buying a home to accelerate their timeframe for doing so. More broadly, COVID-19’s severe impact on major metro areas has led some to suggest an oncoming stagnation in urban centers. While these worries may be a bit premature, demographics alone suggest we may continue to see a shift to the suburbs. The movement of folks from higher cost parts of the country to the South, where single-family homes are more affordable and more prevalent, will also boost construction.”June2020 Us Housing Starts

TRIP Releases Report for America's Aging Interstate System [return to nav]

A new report by TRIP examines the aging U.S. Interstate Highway System as it faces increasing usage, mounting congestion and deteriorating road and bridge conditions.

The report, “Restoring the Interstate Highway System: Meeting America’s Transportation Needs with a Reliable, Safe & Well-Maintained National Highway Network,” finds that as the U.S. Interstate Highway System reaches 64 years old, it faces increasing congestion, unprecedented levels of travel – particularly by large trucks – and insufficient funding to make needed repairs and improvements.

TRIP found that there is a backlog to the tune of $123 billion for the needed repairs and improvements on our interstates. $54 billion is needed to improve pavements, $37 billion to repair our bridges (with 27% of all bridges needing repair) and additional $33 billion required for enhancements and expansions to combat rising traffic and congestion. The report suggested that in order to repair these systems, funding should be increased from the $23 billion that was spent in 2018 on these systems to over $57 billion annually over the next 20 years. 

State by State Break Down

TRIP’s report ranks the states by Interstate systems that are the most congested, have the largest share of pavement in poor condition and bridges in poor/structurally deficient condition, have the highest fatality rate, have experienced the greatest increase in vehicle miles of travel (VMT) since 2000, and that carry the greatest share of commercial trucks.

Pavements on 11% of Interstate highways are in poor or mediocre condition, with three percent rated in poor condition and eight percent rated in mediocre condition. Another nine percent of Interstate pavements are in fair condition and the remaining 79 percent are in good condition.

Hawaii is the worst off with 19% of their pavements considered in poor condition. Delaware (11%), Wyoming (9%) and New Jersey (8%) are next in line. 

An analysis of U.S. Department of Transportation’s National Bridge Inventory data indicates that more than one quarter – 27% – of Interstate bridges (15,709 of 57,741) are in need of repair or replacement. Three percent of the nation’s Interstate bridges are rated in poor/structurally deficient condition, and 56%  are rated in fair condition.  

The report found that Rhode Island and West Virginia are the most in need of bridge repairs with 17% and 14% of bridges being structurally deficient in those states respectively. 

The report also found that travel on our nation’s Interstate highways is increasing at a rate nearly triple the rate that new lane capacity is being added. From 2000 to 2018, vehicle travel on Interstate highways increased 25%, from 662 billion miles traveled annually to 829 billion miles. From 2000 to 2018, lane miles of Interstates in the U.S. increased nine percent, from 208,502 to 226,626 miles.

Forty-seven percent of the nation’s urban Interstate highways (8,914 of 19,160 miles) are considered congested because they carry traffic levels that result in significant delays during peak travel hours. Not surprisingly, California has the most congested roadways with 87% of their urban Interstate highways considered congested. Eighty-two percent of Maryland roadways are considered congested and 78% of New Jersey roadways. 

The full state-by-state breakdown can be found here.

Funding Needed Now

The ability of states to invest in Interstate highway repairs and improvements may be hampered by the tremendous decrease in vehicle travel that has occurred due to the COVID-19 pandemic, which the American Association of State Highway and Transportation Officials estimates will reduce state transportation revenues by at least 30% – approximately $50 billion - over the next 18 months.

The restoration and upgrading of the Interstate Highway System to meet 21st Century transportation needs will require strong federal leadership and a robust federal-state partnership to reestablish the Interstate Highway System as the nation’s premier transportation network.

"Today, the Interstate Highway System continues to save Americans time, lives and money while playing a critical role in supporting economic growth and enhancing the lifestyle choices of the nation’s residents and visitors," the report says. "If Americans are to continue to enjoy the benefit of the unparalleled level of access and mobility provided by the Interstate Highway System, which have enabled the nation’s unprecedented development and growth, the U.S. will need to commit to a well-funded program of Interstate restoration, modernization and renewal."

TRIP suggested the following be done to improve our Interstate system:

  • Reconstruct the nation’s Interstate Highway System, including pavements, bridges and interchanges o Improve safety features on Interstate highways
  • Right-size the Interstate Highway System by:
    • upgrading some existing roadways to Interstate standard
    • adding needed additional highway capacity on existing routes to maintain and improve mobility
    • adding additional corridors to accommodate demographic and economic growth
    • modifying some urban segments to maintain connectivity while remediating economic and social disruption 
New PPP Data Measures How Many Contractors and Construction Jobs the Loans Saved [return to nav]

Lendio recently released some statistics on the Paycheck Protection Program loans the U.S. small-business-loan marketplace for 300 lenders has helped facilitate. Construction ranked first among industries in which Lendio PPP loans were issued, with an aggregate value of more than $181 million.

The construction industry also ranked fourth in jobs saved due to PPP loans facilitated by Lendio, with over 15,000 jobs saved.

In just 3 months, 100,000 business owners have accessed $8 billion in PPP loans through Lendio. 98% of these applicants are first-time Lendio customers.

Coincidentally, the U.S. Small Business Administration released detailed loan-level data on the 4.9 million PPP loans that have been made.

“The PPP is providing much-needed relief to millions of American small businesses, supporting more than 51 million jobs and over 80% of all small business employees, who are the drivers of economic growth in our country,” said U.S. Treasury Department Secretary Steve Mnuchin.

RollCall.com reports the SBA data indicate the industry receiving the largest volume in loans was health care and social assistance, accounting for nearly $67.4 billion. That was followed by professional, scientific and technical services, at $66.4 billion; construction, at $64.6 billion; and manufacturing, at $54 billion.

Indeed the PPP supported construction dramatically, with an Associated General Contractors survey indicating that 80% of members were approved for the loans.

President Trump signed legislation on July 4 extending the PPP application deadline to August 8, as $130 billion in funds remain to be dispersed through the program.        

May US Construction Spending Bucked Rising Employment with a 2.1% Drop [return to nav]

The coronavirus once again crushed the U.S. Commerce Department’s May construction value put-in-place estimates, which fell 2.1%. Construction spending has now fallen for three months in a row, a total of 5.9%, since peaking in February.May2020 Us Construction Segment Spenddata: US Department of Commerce; graph: ForConstructionPros.com

“The decline was surprising, as construction came back online relatively quickly following the lockdown,” says Mark Vitner, senior economist with Wells Fargo Economics. “Aggregate measures of construction activity, such as housing starts and construction employment, show more improvement. While many projects were quick to resume, many builders might have become more cautious about starting new projects.”

Some large municipalities were also slower in allowing construction to resume. The sudden halt to building activity in many areas may have created some unanticipated hurdles to restarting.

A survey by the Associated General Contractors of America and data from construction technology firm Procore show May construction activity is returning to pre-coronavirus (February/March) levels in many parts of the country and some firms adding workers. AGC analysis of May Bureau of Labor Statistics data shows construction employment increased in 92% of 358 metro areas. The AGC/Procore construction-activity data also shows some future projects being canceled and many others delayed by supply chain issues and labor shortages.

Much of the May decline in construction spending owed to a 4.0% drop on residential projects. Single-family outlays fell 8.5%, while multifamily rose 2.3%. Home improvement spending edged up 0.1%.

Nonresidential spending dipped 0.9%, but there was a significant divergence in public and private outlays. A 1.2% gain in public expenditures was driven by a 2.8% rebound in highway and street spending and a 1.2% climb in transportation outlays. Public education building expenditures also eked out a 0.1% rise. Despite this strength, the COVID-19 crisis has put the fiscal health of many state and local government under tremendous pressure. Declines in tax revenues will likely lead to large cutbacks in public construction projects this year and next, absent significant federal relief.

“It is likely that the pickup in highway construction and other public spending that occurred in May will fade as soon as current projects are completed,” said Ken Simonson, AGC's association’s chief economist. “Our latest survey of contractors, conducted June 9-17, found only about one-fifth of respondents had won new or expanded work—unchanged from early May. In addition, nearly one-third of respondents reported that an owner had canceled an upcoming project.”

Private nonresidential spending slipped 2.4%. Nearly every major subcategory declined. The 3.1% drop in the largest category, power, was an acceleration of the segment’s April loss. Perhaps more ominous is manufacturing construction’s turnaround. The segment managed a very slight gain in April, and fell 4.1% in May. The others of the largest five nonresidential categories dropped notably:

  • Commercial (-1.2%)
  • Healthcare (-6.7%)
  • Office (-1.1%)
Construction Employment Rebounds in May [return to nav]

Highway and bridge contractors added 4,400 jobs to the payroll between March and April, according to the latest data from the U.S. Bureau of Labor Statistics. Total employment increased to 324,300 workers in April, but declined 4 percent from 337,600 jobs in April 2019.

“Although highway and bridge construction work has continued to increase over the last few months and workers are being hired, we would expect more employees on the job at this point in the construction season,” said ARTBA Chief Economist Alison Black.  “The slow pace of hiring is not surprising given the broader economic uncertainty due to the COVID-19 pandemic.”

Detailed information for highway, street and bridge construction employment always lags one month behind the national jobs report. New data for the entire construction market shows that overall, the sector recovered some of the jobs lost in April. Construction firms employed 7.1 million workers in May, compared to 6.5 million in April and 7.3 million in March. But overall employment levels in May were down from 7.5 million workers in May 2019.

The economy gained 2.5 million jobs in May following significant employment declines in March and April. This is due to the resumption of some economic activity following the economic slowdown caused by the pandemic and efforts to contain it. Monthly job losses averaged 6.5 million over the past three months. The unemployment rate fell from 14.7 percent in April to 13.3 percent in May, as the number of unemployed people decreased from 23.078 million to 20.985 million.

Read ARTBA’s June labor report.

Trump Finally Plans His $1T Infrastructure Boost [return to nav]

Trump has promised a $1 trillion package for infrastructure since he was campaigning to be President in 2016 and it appears that he may finally fulfill that promise. 

Bloomberg says a preliminary version of the sweeping legislative package is being prepared by the Department of Transportation.  The plan would reserve most of the money for traditional infrastructure work, like roads and bridges, but would also set aside funds for 5G wireless infrastructure and rural broadband which he is scheduled to speak on later this week. 

In addition to his campaign promise, President Trump has launched numerous proposals for infrastructure spending during his presidency, and last year agreed in principal a $2 trillion plan with the Democratic party. It, however, never got off the ground.

In January, the Democratic-led House proposed its own $760 billion plan to renew infrastructure spending over the next five years. 

Where's the Pay For?

Funding such a package has always been an issue for both parties and it remains unknown how the Trump administration would fund this program as the president favors paying for the plans with minimal government money. He has been a proponent of raising the Federal gas tax and has discussed the involvement of the private sector, while Democratic rivals propose majority government funding.

"Since he took office, President Trump has been serious about a bipartisan infrastructure package that rebuilds our crumbling roads and bridges, invests in future industries, and promotes permitting efficiency," Judd Deere, White House spokesman said in a statement.

Infrastructure spending has long held appeal for lawmakers as a way to spur growth, and the pandemic is renewing calls to fast-track roads and other projects so it’s possible that the infrastructure measures currently being drafted could be rolled into the next round of pandemic relief. 

The Democratic bill to reauthorize the current infrastructure program was unveiled this month. It includes investments in roads and bridges, funding to make certain projects more resilient to climate change, and funding for public transit and Amtrak, among other priorities. The House Transportation committee is set to take up the measure this week.

The existing surface transportation authorization law, known as the FAST Act, authorizes $305 billion over five years and expires on Sept. 30. Lawmakers will either extend it or come up with a long-term replacement. It’s not yet clear how closely the administration’s plan will align with the Democrats’ proposal but it's clear some action on infrastructure is needed, and soon.

Trump Executive Order Scales Back Environmental Reviews on Infrastructure Projects [return to nav]

President Trump has issued an executive order to bypass environmental reviews. The hope is to reduce delays for projects and spur economic growth after the coronavirus pandemic through these infrastructure projects.

"From the beginning of my Administration, I have focused on reforming and streamlining an outdated regulatory system that has held back our economy with needless paperwork and costly delays," Trump said in the order. "Antiquated regulations and bureaucratic practices have hindered American infrastructure investments, kept America’s building trades workers from working and prevented our citizens from developing and enjoying the benefits of world-class infrastructure. The need for continued progress in this streamlining effort is all the more acute now, due to the ongoing economic crisis. Unnecessary regulatory delays will deny our citizens opportunities for jobs and economic security, keeping millions of Americans out of work and hindering our economic recovery from the national emergency."

The executive order would direct federal agencies to pursue emergency workarounds from bedrock environmental laws, such as the National Environmental Policy Act and the Endangered Species Act, to hasten completion of various infrastructure projects..

Trump has been issuing executive orders on a near-weekly basis during the Coronavirus pandemic. This order will mark his 25th of the year as he uses the pandemic to justify efforts to do away with government regulations that are designed to protect the environment and public health but are viewed by critics as costly and unnecessary.

Is De-Regulation Dangerous?

In 2017, Trump also tried to reduce regulatory reform designed to speed infrastructure projects. However, a report prepared for the Treasury Department in 2016 looked at 40 major proposed transportation and water projects whose completion had slowed or was in jeopardy and found that “a lack of funds is by far the most common challenge to completing these projects," and not regulation.

We know finding the additional dollars to fund new roads and bridges has proved challenging as lawmakers and the president fail to agree on what is necessary to raise more money for transportation projects without adding to the already soaring national debt.

While speeding up infrastructure projects is a good idea in theory, regulations are put in place to protect the environment and also those working on the projects and many fear this Executive Order is setting a dangerous precedent. Environmental groups have said sidestepping environmental review requirements would hurt many of the same communities already suffering the most from the pandemic.

““Abusing emergency powers to deep-six necessary environmental reviews is utterly senseless," Gina McCarthy of the Natural Resources Defense Council said. "These reviews are required by law to protect people from industries that can harm our health and our communities. Getting rid of them will hit those who live closest to polluting facilities and highways the hardest—in many of the same communities already suffering the most from the national emergencies at hand." 

House Speaker Nancy Pelosi also weighed in with a statement

“By using the coronavirus pandemic to justify fast-tracking potentially wasteful, dangerous or destructive infrastructure programs, the president has proven once again his utter contempt for our laws, for the health of our communities and for the future of our children,” she said.

Still, cutting regulations has been a hallmark of Trump’s presidency and conservative groups and lawmakers have been encouraging him to keep it up.

“Time is money, so eliminating delays that hold up or kill projects will have the same impact as increasing funding, and it will let workers get back on the job improving our infrastructure,” said Rep. Sam Graves, the ranking Republican on the House Transportation and Infrastructure Committee.


April US Housing Starts Fall to Five-Year Low [return to nav]

U.S. housing starts plunged 30.2% in April to an 891,000-unit seasonally adjusted annual rate that outstripped economists’ forecasts in a Reuters poll who expected a fall to 927,000 units. The April result was the lowest level of housing construction since early 2015, according to U.S. Department of Commerce numbers released today.

April 2020 Us Regional Housing StartsMany states considered homebuilding as essential when they enforced lockdown orders in mid-March to curb the spread of COVID-19, the respiratory illness caused by the coronavirus. But disruptions to building material supply chains have likely weighed on activity since the pandemic response began. An Associated General Contractors survey from the first week of May adds context to the status of construction investment: 37% of contractors say their owners voluntarily halted work out of fears of the pandemic. Thirty-one percent report canceled projects because of a predicted drop in demand. And 21% report projects canceled as a result of lost private funding.

“April’s decline largely reflects plunges in building activity in large states, some of which did not deem home construction an essential business,” says Mark Vitner, senior economist with Wells Fargo Economics. “But activity also pulled back even in states where homebuilding was deemed essential, as builders grew cautious amidst a nearly complete lull in demand as well as growing concerns about apartment tenant demand and the ability to collect rents.”

Permits for new construction fell 20.8%, but remain at a 1.074 million-unit pace that suggests builders are still planning construction.

Housing demand derives from underlying economic growth and the economy turned steeply into recession in April. Initial unemployment claims suggest more than 30 million jobs have been eliminated since early March. Fewer people are going to be interested in committing to a new mortgage when they are concerned about their job and income prospects.

Reuters reports economists expect the housing market downturn, together with a collapse in consumer spending, business investment and manufacturing, will result in gross domestic product (GDP) shrinking at as much as a 40% pace in the second quarter, the deepest since the 1930s. The economy contracted at a 4.8% rate in the January-March quarter.

Vitner's analysis points out that the just over half of job losses so far have been concentrated in the leisure, hospitality and retailing sectors, where part-time employment tends to be more common. Those losses are being felt most heavily by apartment owners. Recent wage gains had been pushing rent increases, but now they’re likely seeing the most delinquent rents and rising vacancies. Luxury and lifestyle communities appear to have dodged a bullet, as many of their tenants are now working from home. The wave of new construction currently underway that will likely be delivered in a weak job market.

“Demand for single-family homes has proven surprisingly resilient,” according Vitner. “While showings of existing homes were largely forbidden during April, buyers apparently returned later in the month. Mortgage applications for the purchase of a home have rebounded solidly and searches for new homes on Google have rebounded back to pre-shutdown level.

“April’s drop in starts also reflects some payback from the strong start to the year. Even with April’s drop, single-family starts through the first four months of this year are running 1.3% ahead of their year-ago level, and are up in every region except the Northeast, where they are down 25.5%."

A signal that the housing market is showing signs of stabilizing in the wake of the COVID-19 pandemic comes from builder confidence for newly-built single-family homes increasing seven points to 37 in May, according to the latest National Association of Home Builders/Wells Fargo Housing Market Index (HMI). The rise in builder sentiment follows April’s largest single monthly decline in the history of the index.April 2020 Us Housing Starts

        

Marcum: Infrastructure Spending Drives Strong Q4 Commercial Construction Index [return to nav]

The Marcum Commercial Construction Index for the fourth quarter of 2019 reports healthy levels of construction spending in large part due to ongoing strength in infrastructure-related categories. Nonresidential construction spending stood at an annualized rate of $779.6 billion in December 2019, down 1.2% from the previous month but up 4.4% year-over-year. 

The index is produced by Marcum’s National Construction Services group.

Eleven of the 16 nonresidential construction sectors expanded year-over-year, including massive upticks in publicly funded categories like water supply (+33.6%), conservation and development (+16.9%), highway and street (+14.1%), and public safety (+10.1%).  Spending decreased from the same time last year in predominately privately funded categories like commercial (-4%), lodging (-3.9%), and amusement and recreation (-3%).

“The ongoing strength in infrastructure-related spending is a result of state and local finances being at their healthiest levels in quite some time as consumer spending, ongoing staffing expansions, and elevated assessed values drive tax collections higher,” wrote Anirban Basu, author of the report and Marcum’s chief construction economist.

Mr. Basu points to inflated property values as a possible explanation for stagnation in privately funded segments. “Investors and developers are becoming increasingly concerned that property values are speculatively high and that the pace of new project deliveries is outpacing the economy’s capacity to neatly absorb them,” he said.

Construction employment increased at a faster pace than the national nonfarm economy on both a monthly (+0.6%) and yearly (+1.9%) basis.  Nonresidential specialty trade contractors added jobs at an impressive rate throughout 2019, while the nonresidential building category exhibited the slowest pace of growth of any of the construction subsegments. 

Despite ongoing hiring, construction labor shortages remain problematic. “Throughout 2019, 4.2% of all available construction jobs were unfilled, the highest proportion on record.  Between 2001 and 2015, the proportion of construction jobs that went unfilled was just 1.8%,” wrote Basu.  

A reduction in trade-related uncertainty – the USMCA trade agreement was ratified, BREXIT is finally proceeding, and the U.S. and China have reached a phase I trade deal – along with a healthy residential sector and a labor market that exceeds expectations all represent economic tailwinds going into 2020.

Basu cites rising levels of debt across the economy, heightened political uncertainty as the November presidential election nears, and the effects of the coronavirus on world markets as tailwinds that could limit economic growth in 2020.