Construction News Tracker is presented by Caterpillar and produced by ForConstructionPros.com.
Major industry economists have weighed in on a report on prospects for the construction industry in the months ahead, and each has a positive spin. ABC Chief Economist Anirban Basu notes that 2018 finished with strong infrastructure investment, and he sees that trend continuing with significant spending growth in the months ahead. Likewise, AGC Chief Economist Ken Simonson cited the 6% growth in 2018 for construction spending and foresees that continuing, though a bit less than last year. ARTBA Chief Economist Alison Premo Black says that public highway, street and related investment is expected to rise from $63.4 billion to $66.5 billion in 2019, as other construction sectors will also rise. IMA Market forecasters believe the industry will continue to surge ahead bolstered by the need for a federal infrastructure plan in 2019. However, Dodge Data reported that in the 10 U.S. markets with the highest construction starts value in 2018 four gained activity while six declined; and Dodge Chief Economist Robert Murray says for 2019 the economics might not be as strong for commercial and multifamily starts as what occurred in 2018.
The latest Dodge Data Momentum Index rose 4.7% in January to 157.7 from a revised December Index of 150.6. The Index reflected similar gains for institutional building, up 5%, and commercial building, up 4.6%. The Dodge Index is a monthly measure of the first report for nonresidential building projects in planning which leads construction spending for nonresidential buildings by a year. January's positive reading is consistent with the monthly average for the second half of 2018.
The latest analysis of U.S Labor Department statistics by AGC show construction employment expanded by 52,000 jobs in January putting the industry as a whole up 338,000 jobs for the year — a 4.7% increase over 2017. Nonresidential construction employment grew by 28,600 net new positions while construction unemployment rose to 6.4% — up 1.3% from December's revised number. ABC Chief Economist Anirban Basu said the employment numbers are exceptional and indicate that more people are being persuaded to participate in the strongest labor market in a generation. Basu said as construction job totals surge higher it comports neatly with elevated backlog and the notion that a strong economy continues to create fresh opportunities for contractors.
Speaking of contractors, World of Concrete 2019 exceeded expectations across the board as it concluded its 44th show. This year's exposition drew over 60,000 industry professionals and featured more than 1,500 exhibitors — 259 of them new — showing off their wares over 776,000 square feet of space at the Las Vegas Convention Center.
Construction costs remain elevated compared to a year earlier despite a decline in December. AGC is reporting that a steep fuel price drop in December was offset by higher costs for other materials and services as the price index for new building construction outpaced the index at the end of the year leaving some contractors caught offguard for higher costs in 2018. Overall the Producer Price Index finished 2018 3.7% higher than in 2017. AGC Chief Economist Ken Simonson said officials may be forced to scale back infrastructure projects due to continuing higher costs while many privately financed projects may no longer pencil out if construction costs continue to rise.
Amazon has decided to pull out of its planned New York City campus following reports of extensive political resistance. The $3 billion incentive-based effort to create 25,000 new jobs for the Long Island complex even fell short of labor union wishes. Amazon says it will continue with plans to build a second headquarters site in northern Virginia but will not look any further to replace the New York City site.
If you own a Dodge Ram pickup truck pay attention. Fiat Chrysler is recalling nearly 574,000 Ram trucks due to a steering problem. Being recalled are 2013-17 Ram 3500, 2014-17 Ram 2500 and 2014-17 Ram 3500 chassis cabs. Fiat Chrysler says it has found a steering linkage problem that could separate after time resulting in steering loss to the pickups. If you own one of these Dodge Ram pickups contact your dealer.
Meanwhile, Ford Motor Company is recalling 1.48 million F-150 pickup trucks due a transmission problem that causes the vehicle to suddenly downshift into first gear while in operation. The Ford recall covers all F-150’s model years 2011 to 2013 equipped with the 6-speed automatic transmissions. Dealers will update the power-train control system for the fix.
In closing, most people can stay motivated for two or three months. A few people can stay motivated for two or three years. But a winner can stay motivated for thirty years — or as long a it takes to win.
This is Construction News Tracker looking over the industry that makes the world a better place, presented by Caterpillar and produced by ForConstructionPros.com.