The Construction Monthly Metals Index (MMI) gained 3.8%, as U.S. construction spending rose 4.1% during the first nine months of 2020.
The MetalMiner 2021 Annual Outlook consolidates our 12-month view and provides buying organizations with a complete understanding of the fundamental factors driving prices and a detailed forecast that can be used when sourcing metals for 2021 — including expected average prices, support and resistance levels.
U.S. construction spending up 4.1%
Through the first nine months of 2020, U.S. construction spending rose 4.1% compared with the first nine months of 2019, the Census Bureau reported earlier this week.
Construction spending during the first nine months of 2020 totaled $1,058.5 billion.
Meanwhile, spending in September reached a seasonally adjusted annual rate of $1,414 billion, up 0.3% from August. The September rate also marked a 1.5% year-over-year increase.
Spending on private construction reached a seasonally adjusted annual rate of $1,074.9 billion, or up 0.9% from August. Under private construction, residential construction reached a rate of $610.9 billion, or up 2.8%. Nonresidential construction reached a seasonally adjusted annual rate of $464.1 billion in September, down 1.5% from August.
Meanwhile, the estimated seasonally adjusted annual rate of public construction spending reached $339.1 billion, or down 1.7% from August. Educational construction rose 2.0% to $85.3 billion. Highway construction spending fell 5.4% to $89.3 billion.
Construction jobs added
Construction employment increased by 26,000 in September, the Bureau of Labor Statistics reported last month.
Under the umbrella of construction, there was growth in residential specialty trade contractors (+16,000) and construction of buildings (+12,000).
However, construction employment remains below its February level by 394,000.
Total nonfarm payroll employment gained by 661,000 jobs in September.
ABI rises to 47.0
Aside from construction spending, the Architecture Billings Index (ABI), released monthly by the American Institute of Architects, posted a September billings index reading of 47.0.
The September reading marked an increase from the previous month’s 40.0. Nonetheless, any reading below 50.0 indicates billings contraction.
“The third quarter of 2020 ended on a more promising note for architecture firms, as fewer firms reported declining billings in September than in recent months,” the latest ABI report stated. “While the ABI score of 47.0 for the month means that the majority of firms still saw a decline in their firm billings, things have taken a more encouraging turn from the last three months where the recovery had all but stalled.”
By region, the West and Midwest led the way with billings readings of 45.6. The South checked in at 43.7 and the Northeast registered an index reading of 41.5.
This month’s ABI survey question asked architecture firms about their revenue expectations for the remainder of this year and 2021.
“Firms reported that they expect their revenue to decrease by an average of 1.9% from the third quarter to the fourth quarter of 2020, with firms located in the Northeast, and small firms with annual revenue of less than $250,000, expecting larger losses, of 5.6% and 5.5%, respectively,” the report states.
Pending home sales down 2.2% in September
Although private residential construction spending rose in September, pending home sales grew for four straight months before falling by 2.2% in September, according to the National Association of Realtors (NAR).
The Pending Home Sales Index fell to 130.0 in September. An index reading of 100 is equivalent to contract activity in 2001.
“The demand for home buying remains super strong, even with a slight monthly pullback in September, and we’re still likely to end the year with more homes sold overall in 2020 than in 2019,” said Lawrence Yun, NAR’s chief economist. “With persistent low mortgage rates and some degree of a continuing jobs recovery, more contract signings are expected in the near future.”
Actual metals prices and trends
Chinese rebar rose 3.0% month over month to $554.34 per metric ton as of Nov. 1. Meanwhile, Chinese H-beam steel gained 3.0% to $557.32 per metric ton.
U.S. shredded scrap steel jumped 6.6% to $290 per short ton.
European commercial 1050 aluminum sheet rose 3.5% to $2,583.27 per metric ton.
Chinese 62% iron ore PB fines rose 1.6% to $78.44 per dry metric ton.
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