Construction MMI: June construction spending dips 0.7%; ABI makes gains

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In this month’s Construction Monthly Metals Index (MMI): U.S. June construction spending fell compared with the previous month; the Architecture Billings Index showed signs of recovery; and metals in the Construction MMI basket made price gains.
The Construction MMI gained 4.1% for this month’s MMI reading.
Construction Monthly Metals Index

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U.S. construction spending

U.S. construction spending in June reached a seasonally adjusted annual rate of $1,355.2 billion, according to the U.S. Census Bureau.
The June rate marked a 0.7% decline from the previous month. Meanwhile, the figure was up 0.1% from the June 2019 rate.
However, during the first six months of this year, construction spending reached $667.9 billion, up 5.0% year over year.
Broken down further, spending on private construction was at a rate of $1,001.9 billion, or down 0.7% from May.
Within private construction, residential construction came in at a rate of $534.2 billion, down 1.5% from the revised May estimate. Nonresidential construction was at a rate of $467.7 billion, down 0.2% from the May estimate.
Meanwhile, the June rate for public construction spending was $353.3 billion, or down 0.7% from the revised May estimate. Educational construction was at a rate of $85.8 billion, or down 2.7%. Highway construction was at a rate of $102.6 billion, or down 1.7%.

ABI hits 40.0 for June

The Architecture Billings Index (ABI), released monthly by the American Institute of Architects, came in at a reading of 40.0 for June. (Any reading below 50 indicates contraction, while anything above 50 indicates growth.)
However, the June reading marked a significant jump from the previous month’s reading of 32.0.
“Business conditions at architecture firms continued to stabilize in June, following their peak declines in April,” the ABI report notes. “While the ABI score of 40.0 for the month means that the majority of architecture firms still saw their billings decline from May to June, the pace of that decline slowed significantly. Inquiries into new work nearly returned to the positive in June, as clients began trying to restart projects.”
By region, the West and Midwest led the way, posting readings of 36.8. The South came in at 35.9, while the Northeast checked in at 34.2.
This month’s ABI survey asked architecture firms about staffing change expectations.
Of the respondents, 45% said they expect the number of architecture positions at their firm to be the same at the end of the year as it was at the beginning. Meanwhile, 38% said they expected the number to decrease while 17% expect it to increase.

Infrastructure bill?

As we noted last month, the U.S. House of Representatives passed a $1.5 trillion infrastructure bill.
Unsurprisingly, the bill was met with opposition from Senate Majority Leader Mitch McConnell, who called it a “cousin of the Green New Deal.”
As Republicans and Democrats aim to potentially pass a new round of coronavirus-related stimulus, it remains to be seen where infrastructure fits in the picture.
In an op-ed for Fortune, U.S. Steel CEO David Burritt emphasized the need for infrastructure’s inclusion in the next stimulus bill.
“If lawmakers want to spark the economy, quickly create many jobs, and do the most good for the greatest number of Americans, there’s one clear answer: infrastructure investment,” Burritt wrote.
“This will have the additional benefit of making our economy more competitive globally by expanding U.S. capabilities, creating jobs, and providing opportunities for other nations to build and buy American products.”

Actual metals prices and trends

The Chinese rebar price rose 3.6% to $519/mt as of Aug. 1. China H-beam steel rose 1.3% to $532/mt.
U.S. shredded scrap steel fell 8.1% to $238/st.
European commercial 1050 aluminum sheet rose 5.2% to $2,449/mt.
Whether you’re sourcing rebar, aluminum sheet or something else, make sure you know the art of timing your buy.

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