The Construction MMI dropped a point for the second consecutive month, falling from 90 for a November reading of 89.
There were not many significant movements in either direction within the basket of metals. Chinese rebar rose in price, while Chinese H-beam steel dropped. U.S. shredded scrap, meanwhile, fell 6.3%. European commercial 1050 sheet aluminum also fell, dropping 1.3%.
Total Construction Spending
According to U.S. Census Bureau data released Nov. 1, total spending for September amounted to an estimated $1,219.5 billion, up from the revised August total of $1,216 billion.
September spending was up 2.0% from the September 2016 estimate of $1,195.6 billion. As for the year to date, during the first 9 months of this year construction spending amounted to $917.0 billion, which was up 4.3% from the $879.6 billion spent during the first nine months of 2016.
Spending on private construction amounted to a seasonally adjusted annual rate of $942.7 billion, or 0.4% below the revised August estimate of $946.2 billion. Residential construction was at a seasonally adjusted annual rate of $515.4 billion in September, only slightly lower than the revised August estimate ($515.6 billion). Nonresidential construction was at a seasonally adjusted annual rate of $427.3 billion in September, 0.8% below the revised August estimate ($430.6 billion).
Public construction, however, was up for the month.
In September, the estimated seasonally adjusted annual rate of public construction spending was $276.8 billion, 2.6% above the revised August estimate of $269.8 billion. Within the public construction umbrella, educational construction was at a seasonally adjusted annual rate of $71.9 billion, or 5.2% above the revised August estimate of $68.3 billion. Highway construction was at a seasonally adjusted annual rate of $84.3 billion, 1.1% above the revised August estimate of $83.4 billion.
ABI Shows ‘Modest Slowdown’ in Billings
According to the most recent Architecture Billings Index (ABI), put out by The American Institute of Architects, billings slowed down in the month of September.
The ABI posted a 49.1 for the month (a reading of 50 indicates no growth, while anything below 50 indicates a drop in billings). The September figure broke a multimonth streak of billings growth.
However, the ABI report cautions against hasty reactions to the relatively down month.
“Billings have been growing at a strong pace in recent months, so it is too early to determine whether this is a new trend or just a modest course correction,” the report states.
The impact of Hurricanes Irma and Harvey, which rocked Florida and Texas, respectively, also showed in this month’s batch of data.
“The general economy showed more signs of the impact of the hurricanes in September, with nonfarm payroll employment posting its first monthly decline in seven years,” the ABI report states.
Nonetheless, in this month’s ABI survey questions, a majority of construction firms indicated either it was still early to ascertain the scope of any potential impacts to projects as a result of the hurricanes or that they had not seen any impacts to date.
According to the survey results, three-fourths of respondents said they have not seen any hurricane-related impacts on their projects (49%) or that it was too early to tell (26%).
Probing into the results further: 12% of respondents indicated they have seen higher construction materials prices from companies impacted by the hurricane; 8% have seen higher energy prices due to refineries affected by the hurricanes; 7% have seen labor shortages due to increased demand from areas affected by the hurricanes; and 6% have seen construction material shortages due to increased demand from areas affected by the hurricanes.
On the other hand, only 5% of firms nationally said they had to cancel or delay projects due to the hurricanes (unsurprisingly, that figure rises to 12% when focusing specifically on firms based in the South region).
Broken down by region according to billings from September 2016-September 2017, the Northeast led the way with a ABI reading of 56.9, followed by the South (54.0), the Midwest (50.4) and the West (48.4).
The Housing Market
As always, the U.S. housing market is something to keep an eye on.
According to Census Bureau data released last month, privately owned housing starts in September dropped 4.7% below the revised August estimate. Single-family housing starts were down 4.6% for September from the previous month.
The next new residential construction report is scheduled to be released Nov. 17.
As for existing-home sales, the National Association of Realtors (NAR) put out a rosy outlook for 2018.
The NAR’s chief economist, Lawrence Yun, estimated existing-home sales will finish at a pace of 5.47 million, which would be the best number since 2006 (6.47 million). However, that number would represent a 0.4% uptick from from 2016 (5.45 million).
In 2018, sales are forecast to rise 3.7% to 5.67 million, according to the NAR.
Actual Metal Prices and Trends
Chinese rebar rose 1.3% to $615.16/metric ton. Chinese H-beam steel, however, dropped 0.9% to $595.56/mt. Chinese aluminum bar fell 2.8% to $2,578.24/mt.
U.S. shredded scrap dropped 6.3% to $281/short ton.
European 1050 commercial sheet aluminum fell 1.3% to $2,883.78/mt.