The monthly Construction MMI® registered a value of 92 in September, an increase of 3.4 percent from 89 in August, delivering the oft-promised rebound long-expected from renewed commercial construction and housing markets. Overall, US construction spending increased 1.8 percent to an annual rate of $981.31 billion in July, as well.
US construction spending finally caught its stride, hitting its highest level in more than 5-1/2 years as private construction increased and state and local government outlays surged. Private construction, the largest portion of construction spending, advanced 1.4 percent to its highest level since November 2008, according to figures released this month from the Department of Commerce. Investment in private nonresidential structures such as factories and gas pipelines jumped 2.1 percent in July to its highest level in five years.
Still, the specter of a worker shortage is still haunting US construction markets. Construction employment expanded in 223 metro areas, declined in 72 and was stagnant in 44 between July 2013 and July 2014, according to a new analysis of federal employment data released in late August by the Associated General Contractors of America (AGC). As employment grows, 25 percent of construction companies reported labor shortages that forced them to turn down work, according to a survey conducted by SmartBrief in partnership with the association.
The 2014 release of Rhode Island-based Gilbane Building Company’s in-house economics report, Building for the Future — Construction Economics: Market Conditions in Construction, also warned of the skilled labor shortage.
“The good, if not, great news is that the most favorable, forward-looking conditions support expectations for strong industry growth in 2015,” said Ed Zarenski, a Gilbane estimating executive with more than 40 years in the construction business. “Very active markets will drive escalation to climb more rapidly than we have seen in six years. The challenge of anticipated workforce shortages will have a detrimental effect on labor cost, productivity, the ability to readily increase construction volume and the ability to complete projects on time.”
Construction spending for 2014 will finish the year 5.5% higher than 2013 and the unemployment rate in construction is down to 7.5%, yet the industry has been losing workers for more than five years.
Contractors are dealing with the problem by utilizing more prefabrication and automation on building projects. For the metals world, this means earlier completed designs and better-estimated and procured orders of raw materials such as structural steel and aluminum curtainwall and exterior cladding. In a surprise to no one, aluminum was the big gainer for construction metals while the Chinese metals remained largely unchanged as the world’s largest construction market continues to reel from a struggling economy that’s not getting traction, despite stimulus efforts.
The price of European 1050 aluminum closed the month up 9.4 percent at $3,268 per metric ton. At $381.00 per short ton, the price of US shredded scrap finished the month 0.5 percent higher. This was the second straight month of declines.
The weekly US Midwest bar fuel surcharge finished the month at $0.51 per mile after dropping 1.9 percent. Last month, the weekly US Gulf Coast bar fuel surcharge dropped 1.8 percent to $0.50 per mile. The weekly US Rocky Mountain bar fuel surcharge ended the month at $0.53 per mile, down from $0.53.
Hovering around $157.93 per dry metric ton for the month, the Chinese low price of 62% Australian iron ore fines remained unchanged. Chinese aluminum bar experienced a flat month, staying around $2,312 per metric ton. Hovering around $525.90 per metric ton for the month, Chinese H-beam steel remained unchanged. Prices for Chinese rebar remained constant this past month, holding at around $524.27 per metric ton.
The Construction MMI® collects and weights 9 metal price points used within the construction industry to provide a unique view into construction industry price trends over a 30-day period. For more information on the Construction MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.