Digging into Construction Data

NABE Real Estate/Construction Roundtable

webinar, April 8, 2010Ken Simonson, Chief Economist

AGC of Americasimonsonk@agc.org

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

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Source: Prof. Stephen Fuller, George Mason University

Construction Spending, 2000-2009

Source: Census Bureau, Bureau of Economic Analysis

$16,000

$15,000

$14,000

$13,000

$12,000

$11,000

$10,000

$2,000

$1,000

$0

Construction

GDP

GDP and Construction Spending(SAAR Annual Level, $ in billions)

Construction as a % of GDP

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Private Nonresidential ($303b, -0.4%, -24%)

Public ($293b, -1.7%, -5%)

Private Residential ($251b, -2.1%, -3.8%)

Source: Census Bureau

1000

950

900

850

450

400

350

300

250

200

Total Construction ($846b, -1.3%, -13%)

Construction spending by segment, 1- & 12-month changeSeasonally adjusted annual rate (SAAR)

Single-family (SF) vs. multifamily (MF)

vs. 1/10 vs.

2/09 SF 0% 4% Improvements -4% 4%

MF 0% -52%

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Permitsvs. 1/10 vs. 2/09

SF ▬▬▬ 0% 32%

MF ▬▬▬ -8% -36%

Starts

SF ▬ ▬ ▬ 0% 40%

MF ▬ ▬ ▬ -30% -65%

Housing outlook

• SF: starts, permits should rise throughout ‘10• MF: No improvement likely until ‘11

- Rental demand hurt by job losses among would-be 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

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Nonres totals (billion $, SAAR), share, 1- & 12-month change

2/10 Total Share vs. 1/10 vs. 2/09

Nonresidential $588 billion 100

% -1% -

16%

Educational 92 16 - 1 - 13 Power 88 15 + 1 + 5 Highway and street 80 14 - 2 - 2 Manufacturing 53 9 + 3 - 35 Commercial 45 8 - 3 - 36 Office 44 7 - 3 - 31 Health care 41 7 - 2 - 15 Transportation 35 6 0 + 12 Sewage and waste disposal 24 4 - 5 - 3 Communication 20 3 + 1 0 Amusement and recreation 16 3 - 2 - 23 Other (lodging; water, public safety; conservation; religious): 9% of total

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Source: Census Bureau

Construction spending: industrial, heavy (billion $, SAAR) 2008, 2009, 2010

8

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

Predictors of construction demand

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Architecture & engineering services empl.

Source: American Institute of Architects, BLS

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

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Source: Author

AGC economic resources (email simonsonk@agc.org)

• 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

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Source: Prof. Stephen Fuller, George Mason University