Construction Springs Ahead—No April Fools’ Day Jok
Washington, D.C., April 1--The Associated General Contractors of America (AGC)
commented on the value of construction put in place, which soared to a 13th consecutive record of $1.047 trillion at a seasonally adjusted annual rate, as reported today by the Census Bureau.
AGC chief economist Ken Simonson said, "I expect nonresidential construction to maintain through 2005 at least the seven percent growth rate it had in the first two months.
"Residential construction should eventually taper off, although it has been a pleasant surprise so far, growing 12 percent in January and February compared to the same months of 2004.
"As for prices, I expect some declines, especially for steel and hopefully soon for oil, but the trend will still be upward and at a faster rate than for the economy as a whole.
"Confirming the industry’s widespread contribution to economic growth, construction employment set another seasonally adjusted record in March of 7.15 million payroll jobs. Even more remarkable, construction contributed nearly one-fourth of the total nonfarm job gain in March, according to today’s report from the Bureau of Labor Statistics (BLS)," Simonson added.
"In the past 12 months, construction employment has risen 3.6 percent to a record 7,147,000, more than twice as fast as the 1.6 percent gain in all nonfarm employment," Simonson pointed out. "All five BLS subcategories of construction employment shared in the gains since March 2003: residential building, +7.1 percent, nonresidential building, +3.7 percent, heavy and civil
engineering, +0.8 percent, residential specialty trades, +3.4 percent, and nonresidential specialty trades, +3.6 percent.
"The manufacturing sector is clearly benefiting as well from the boom in construction," Simonson commented. "In today’s report by the Institute for Supply Management (ISM) on manufacturing purchasing executives, the first comment quoted was, 'The construction sector continues to expand.' And yesterday the Census Bureau reported that new orders for construction machinery jumped 14 percent in the first two months of 2005 compared to January-February
2004, while orders for construction materials and supplies rose 10 percent."
Simonson cited one cause for concern. "The construction industry is being hit with far more price increases than most businesses or consumers."
Today’s ISM report said purchasing executives had mentioned a range of construction inputs as having risen in price from February to March: aluminum, copper, diesel fuel, freight charges, petroleum-based products, steel, and wood, although steel was listed by some as having dropped. In addition, steel products were listed in short supply.
"Those reports are consistent with what contractors reported at AGC’s convention in Las Vegas last month—lots of higher prices but mixed reports on steel costs," Simonson said. "These reports also fit the BLS measure of the producer price index (PPI) for construction materials and components. That rose 10 percent from February 2004 to February 2005, compared to a four percent gain for the overall PPI."
The Associated General Contractors of America (AGC) is the largest and oldest national construction trade association in the United States. AGC represents more than 33,000 firms, including 7,000 of America’s leading general contractors, and over 12,000 specialty-contracting firms. More than 14,000 service providers and suppliers are associated with AGC through a
nationwide network of chapters. Visit the AGC Web site at www.agc.org
Related Topics:Associated General Contractors of America