Construction Economic News
You’ll often hear that the residential real estate market will be the first among all players in the economy to signal a cyclical change—e.g., from recession to recovery or vice versa—brought on by central bank interest rate action.
There’s no getting away from it, the opening sentence of a story on present economic circumstances has to feature inflation. So that’s where we’ll begin our Nuggets report this month, with the first point below laying out the broad strokes. Then we’ll delve deeper into today’s pricing and costing structures, and what additional knock-on implications are being revealed by other recent public and private sector data releases.
Clichés are often true and it is the case that a picture can be worth a thousand words.
June Tried, but Didn’t Match May for Megas ConstructConnect announced today that June 2022's volume of construction starts, excluding residential work, was $47.5 billion (green shaded box, bottom of page 11), a decrease of -24.3% versus May’s figure of $62.7 billion (previously reported as $63.4 billion). The sizable drop was to be expected, given that May had such an exceptional array of mega-sized project groundbreakings.
According to CME Group, an American global markets company and exchange operator, and The Wall Street Journal, CME Group will be introducing a new futures contract using ticker “LBR” starting as early as August 2022. This could be a significant benefit to smaller sawmills along with general and trades contractors involved in housing construction. Among the primary reasons are:
In the United States in June, according to the latest Employment Situation report from the Bureau of Labor Statistics, jobs creation maintained a strong pace, +372,000, although it didn’t quite keep up with the average through the first five months of this year, +474,000.
In stock market parlance, a bear market refers to a decline from recent peak of -20% or more.
Earlier this month Amazon canceled or delayed the construction of over a dozen new warehouse structures. This news comes not long after the company posted its first quarterly pre-tax income loss since 2014; however, this was in part a result of the company’s acquisition of MGM Studios in early 2022. Excluding the acquisition, income from continuing operations was reported for Q1 2022 at $-3.84 billion.
The latest data on construction materials and supplies suggest no stop to the supply chain and manufacturing challenges facing the construction industry. Unfilled orders, new orders, and total inventories all reached historic highs in current dollar prices in the latest data reported for April 2022.