Construction MMI: U.S.’s November construction spending rises

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The Construction Monthly Metals Index (MMI) ticked up 5.8% this month, as U.S. construction spending rose in November.

January 2021 Construction MMI chart

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U.S. construction spending

U.S. construction spending reached a seasonally adjusted annual rate of $1,459.4 billion in November, the Census Bureau reported this week.

The November rate marked a 0.9% increase from the previous month. Furthermore, the rate increased 3.8% year over year.

Meanwhile, construction spending through the first 11 months of 2020 totaled $1,314.1 billion, up 4.4% compared with the first 11 months of 2019.

Meanwhile, private construction reached a rate of $1,111.8 billion, or up 1.2% from October. Under the umbrella of private construction, residential construction reached $658.1 billion in November, or up 2.7%. Nonresidential construction dipped 0.8% to $453.8 billion.

Public construction fell 0.2% to an estimated seasonally adjusted annual rate of $347.6 billion. Under public construction, educational construction rose 0.3% to $86.7 billion. Highway construction reached a rate of $97.5 billion, or up 1.8% from October.

ABI: billings fall for ninth consecutive month

Aside from construction spending, the Architecture Billings Index (ABI), released monthly by the American Institute of Architects, posted an index value of 46.5 in November.

The November value marked the ninth consecutive month of billings decline. Furthermore, the value fell from 47.5 the previous month. (Any index value less than 50 indicates billings decline.)

Furthermore, the design contracts index checked in at 48.6, down from 51.7 the previous month.

“The recent increase in COVID-19 cases over the last several weeks seems to have put a damper on the nascent recovery, and also appears to be reflected in a decline in the value of new design contracts in November, following their first increase since February last month,” the ABI report stated. “In addition, while inquiries into new work continued to rise, the pace of that growth slowed substantially from the previous two months. Together, these signs indicate that client interest in new projects has started to wane after more encouraging signs last month.”

By region, the Midwest led the way with an index value of 50.1 in November. The West checked in at 48.3, followed by the South (46.7) and Northeast (38.7).

Looking to the calendar year ahead, this month’s ABI survey asked architecture firms about their expectations for 2021 and their biggest concern for the year.

Of the respondents, 7% answered it will be a great year, while 39% predicted it will be a good year. Meanwhile, 25% said it will be a so-so year and 25% anticipate a “challenging” year. In addition, 4% indicated concern it could be a “disastrous” year for their business.

Why are some firms concerned?

Among top three concerns, 29% cited increasing firm profitability.

“The top concerns cited by firms were split fairly evenly between general concerns about running their business and concerns related to the impact of the COVID-19 pandemic,” the ABI report added. “Some of the other top concerns from last year, primarily related to issues around hiring and retaining staff, dropped off the list this year, amid the economic downturn and staff layoffs and furloughs.”

Pending home sales fall in November

Meanwhile, in the housing market, pending home sales fell 2.6% in November from the previous month, the National Association of Realtors (NAR) reported.

The November results marked the third consecutive month of declines.

However, pending home sales were up 16.4% from November 2019. Furthermore, the November Pending Home Sales Index reached 125.7, an all-time high for the month.

As noted earlier, private residential construction spending rose in November.

“The latest monthly decline is largely due to the shortage of inventory and fast-rising home prices,” said Lawrence Yun, NAR’s chief economist, in a release. “It is important to keep in mind that the current sales and prices are far stronger than a year ago.”

Actual metals prices and trends

Although U.S. construction spending gained in November, the world continues to grapple with ongoing economic uncertainty stemming from the coronavirus pandemic.

As for key construction materials, the Chinese rebar price jumped 12.5% month over month to $690.26 per metric ton as of Jan. 1. Meanwhile, the Chinese H-beam steel price ticked up 1.9% to $577.28 per metric ton.

The U.S. shredded scrap steel price surged 38.3% to $401 per short ton.

The European commercial 1050 aluminum sheet price held flat, gaining marginally to $2,722.00 per metric ton.

Chinese iron ore PB fines rose 1.9% to $81.25 per dry metric ton.

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