Construction MMI: YTD construction spending up 7.5%; Nucor to build new rebar micro mill
The Construction Monthly Metals Index (MMI) fell by 6.1% for this month’s reading, as U.S. construction spending rose by 7.5% year over year in the first 10 months of the year.
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US construction spending up in October
U.S. construction spending came in at a seasonally adjusted annual rate of $1,598 billion in October, up 0.2% from September, according to the Census Bureau.
Furthermore, the October spending rate increased by 8.9% compared with October 2020 spending.
Through the first 10 months of the year, U.S. construction spending totaled $1,323.1 billion, or up 7.5% year over year.
Private construction spending in October reached a seasonally adjusted annual rate of $1,245.0 billion, or down 0.2% from September. Within private construction, residential construction reached a rate of $774.7 billion in October, down 0.5% from September. Nonresidential construction rose 0.2% to $470.3 billion.
Meanwhile, public construction spending rose 1.8% to a rate of $353.0 billion. Educational construction spending rose 0.2% to $82.2 billion. Highway construction spending rose 2.4% to $102.5 billion.
Nucor to build third rebar micro mill
As we reported yesterday, Nucor Corporation on Monday announced plans to build its third rebar micro mill.
The steelmaker began operations at rebar micro mills in Missouri and Florida in 2020.
The new mill will have a budgeted capex of $350 million, the firm said, with an annual capacity of 430,000 tons.
“Rebar is used primarily in the construction of roads, buildings, sidewalks and other structures,” Nucor said. “Due to the variety of its end uses, rebar has had resilient demand characteristics over the last 20 years. The rebar market is expected to show continued strength. Most of the rebar used in the U.S. is produced domestically, and rebar imports have decreased in recent years due to strong trade enforcement.”
The firm said the new mill will be built in the South Atlantic region.
ABI growth continues but pace slows
The Architecture Billings Index, a leading economic indicator of nonresidential construction activity, showed growth in October with a reading of 54.3. Any reading greater than 50 indicates billings growth.
However, the October value marked a decline from 56.6 the previous month. Meanwhile, the design contracts index rose to 58.0 from 54.7 the previous month.
Despite the slowing of the pace of growth, the October reading reflects “generally strong” business conditions, the ABI report noted.
“In addition, inquiries and the value of new design contracts, both indicators of future work at firms, strengthened in October, meaning that clients are continuing to both start conversations about new projects and are signing contracts to begin those projects in the coming months,” the report added. “Although concerns about staffing, inflation, and construction material prices and availability remain, they have not yet acted as a major deterrent to projects at this time.”
At 6.2%, inflation is at its highest rate in 30 years.
By region, the Midwest led the way in October with an ABI value of 61.9, trailed by the South (58.2), West (53.4) and Northeast (48.6).
Overall, architecture firms are relatively optimistic about their revenue growth forecasts for the years ahead. This month’s ABI survey question polled architecture firms about their revenue expectations, revealing they expect growth of 5.6% from 2020 to 2021 and of 6.7% in 2022.
Construction sector adds 31,000 jobs
Total nonfarm payroll employment rose by 210,000 in November, according to the Bureau of Labor Statistics. Furthermore, the unemployment rate fell by 0.4 percentage point to 4.2%.
Pertinent to the Construction MMI, the construction sector added 31,000 jobs in November. Employment of specialty trade contractors rose by 13,000, while employment in building construction rose by 10,000 and in heavy and civil engineering construction by 8,000.
Total construction employment of 7.53 million reached its highest seasonally adjusted level since March 2020, according to the Associated General Contractors of America. However, construction employment remains down by 115,000 compared to the February 2020 level.
“It is heartening to see steady job growth across all construction segments following a long period during which only residential contractors were adding employees,” said Ken Simonson, chief economist for the Associated General Contractors of America. “But record job openings show the industry needs still more workers as more types of nonresidential projects get started.”
Citing the prospect of more severe worker shortages on the heels of the recent passage of the Infrastructure Investment and Jobs Act, the association also called for investment in career and technical education programs.
“These new federal investments will create many new career opportunities in construction, now we need to make sure potential workers are aware of those opportunities and prepared to take advantage of them,” CEO Stephen E. Sandherr said.
Actual metals prices and trends
The Chinese rebar price fell 8.32% month over month to $745 per metric ton as of Dec. 1. In addition, the Chinese H-beam steel price fell 13.35% to $739 per metric ton.
Meanwhile, the U.S. shredded scrap steel price held flat at $470 per short ton.
The European commercial 1050 aluminum sheet price ticked up just 0.15% to $4,494 per metric ton.
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