Transcript Construction & Materials Outlook: Sinking Demand, Higher Costs

Digging into Construction Data
NABE Real Estate/Construction Roundtable
webinar, April 8, 2010
Ken Simonson, Chief Economist
AGC of America
[email protected]
2
Economic impact of nonresidential construction
• Jobs: 28,500 per $1 billion
• 1/3 direct, onsite construction
• 1/6 indirect (quarries, mfg., services)
• 1/2 “induced” by spending from higher earnings of
construction, indirect workers and owners
• GDP: $3.4 billion
• Personal Earnings: $1.1 billion
Source: Prof. Stephen Fuller, George Mason University
Construction Spending, 2000-2009
GDP and Construction Spending
(SAAR Annual Level, $ in billions)
$16,000
$15,000
$14,000
GDP
$13,000
$12,000
$11,000
$10,000
$2,000
Construction
$1,000
$0
Source: Census Bureau, Bureau of Economic Analysis
Construction as a % of GDP
4
Construction spending by segment, 1- & 12-month change
Seasonally adjusted annual rate (SAAR)
1000
950
900
850
n
Total Construction
($846b, -1.3%, -13%)
450
400
350
300
250
200
Source: Census Bureau
 Private Nonresidential
($303b, -0.4%, -24%)
 Public
($293b, -1.7%, -5%)
 Private Residential
($251b, -2.1%, -3.8%)
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Single-family (SF) vs. multifamily (MF)
vs. 1/10
vs. 2/09
 SF
0%
4%
 Improvements
-4%
4%
 MF
0%
-52%
Permits
vs. 1/10
vs. 2/09
SF ▬▬▬
0%
32%
MF ▬▬▬
-8%
-36%
SF ▬ ▬ ▬
0%
40%
MF ▬ ▬ ▬
-30%
-65%
Starts
6
Housing outlook
• SF: starts, permits should rise throughout ‘10
• MF: No improvement likely until ‘11
- Rental demand hurt by job losses among wouldbe renters and by first-time homebuyer credit
- Supply swelled by owners and banks who are
trying to rent out houses and condos
- Banks remain unwilling to lend to developers
Source: Author
7
Nonres totals (billion $, SAAR), share, 1- & 12-month change
Nonresidential
Educational
Power
Highway and street
Manufacturing
Commercial
Office
Health care
Transportation
Sewage and waste disposal
Communication
Amusement and recreation
2/10 Total
$588 billion
92
88
80
53
45
44
41
35
24
20
16
Share
100%
16
15
14
9
8
7
7
6
4
3
3
vs. 1/10
- 1%
- 1
+ 1
- 2
+ 3
- 3
- 3
- 2
0
- 5
+ 1
- 2
vs. 2/09
- 16%
- 13
+ 5
- 2
- 35
- 36
- 31
- 15
+ 12
- 3
0
- 23
Other (lodging; water, public safety; conservation; religious): 9% of total
Source: Census Bureau
8
Construction spending: industrial, heavy (billion $, SAAR)
 2008,  2009,  2010
9
Construction spending: public works (billion $, SAAR)
 2008,  2009,  2010
10
Construction spending: institutional (private + state/local)
 2008,  2009,  2010
11
Construction spending: developer-financed (billion $, SAAR)
 2008,  2009,  2010
12
Predictors of construction demand
Architecture & engineering services empl.
Source: American Institute of Architects, BLS
13
Summary for 2010
• Nonres spending: 0 to -5% (more stimulus put in
place, maybe gains in retail, higher ed, hospitals)
• Res: +5 to +10% (SF up, MF down all year)
• Total construction spending: -4% to +2%
• Materials costs: 0% to +8%
• Labor costs: +3% or less
Source: Author
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AGC economic resources
(email [email protected])
• The Data DIGest: weekly one-page
email (sign up:
www.agc.org/datadigest)
• PPI tables: emailed monthly
• State and metro data
• Stimulus info: www.agc.org/stimulus
• Webinars (May 4 w/ AIA, Reed)
• Feedback on stimulus, credit, costs
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NABE - Setting the pace in business economics
• Professional Development Seminar: DC, 4/12-14
• Housing and construction session
• Annual meeting: Denver, 10/9-12
• Real Estate/Construction Roundtable
• Webinars, annual & spring meeting programs
• Statistics Committee
…much more at www.nabe.com
Source: Prof. Stephen Fuller, George Mason University