It’s that time of the year when everyone is polishing up their crystal balls. Whether for the final weeks of the pro football season, the College Football Playoffs (Go Bucs!), or how business will fare in 2015, everyone is trying to dial in their forecast for next year. I’ve put some of the key indicators below that I track to hopefully give some insight into macroeconomics and the construction economies. (And, by the way, whoever predicted that the Cleveland Browns would beat the Cincinnati Bengals by +1.5 points last week – don’t listen to them anymore.)
Thankfully, many markets are bouncing back to pre-Great Recession levels. It’s not consistent by region across the country, private or public sectors, by building type, or by residential or non-commercial. The most comprehensive source for market statistics affecting the glass and glazing business that I’ve used over my years is the AAMA 2013/2014 Study of the U.S. Market for Windows, Doors and Skylights. In the spirit of continuous improvement, the study methodology keeps getting better, and has the benefit of over 30 years of data correlation. Nothing else even comes close for glass and glazing figures.
Taking a look at the macro-economic environment, there are a handful of key bellwethers I keep my eye on.
- 147 million Americans are working; the highest number in 10 years, even if you factor in population growth. 1
- Long-term unemployment has dropped by 1.2 million over the last 12 months to 2.8 million. 2
- Average weekly hours of work are 34.6, a higher level than has been seen since 2008. 3
- The Producer Price Index for commodities has been coming down since the middle of 2014. If you take out food and energy, it’s fairly flat. Finished energy goods have dropped dramatically since mid-2014.
- Total compensation for private industry workers in all industries is trending up at a rate above 2 percent, which is over the baseline since mid-2010. 5
- The Jobs Openings and Labor Turnover Survey (JOLTS) shows openings vs. hires through the end of October 2014, when there was an increase to 4.8 million openings (3.3 percent). Job separations are on the increase to 3.5 percent, while new hires have flattened out at 3.6 percent. (See chart.)
Construction employment is at 6.1 million jobs, and construction unemployment is at 7.5 percent, the lowest rate it’s been for seven years according to The Associated General Contractors. Demand may be weakening for public sector and non-residential construction.
The AIA Architectural Billings Index looks nine to 12 months down the road to forecast the lead-time between architectural billings and construction spending. The national index is reported on a monthly basis, whereas the regional breakdowns are reported quarterly. The latest national index was reported in mid-November at 53.7, which is slightly down from September. The project inquiries index of 62.7 points to a strong 2015, as does the just introduced indicator of “new design contract trends” at 56.4. The South is the strongest of all of the regional outlooks, at 58.4, which correlates to where AAMA predicts the highest concentration of future construction activity will occur.
Even if the economy and construction markets are a rising tide, it doesn’t mean that your firm will get a growing share of the market. Do you have the products the market is looking for? Are your suppliers good partners to your growth and innovation? What threats are on the horizon from competitors or regulatory change that could upset your plans? And as Johnny “Football” Manziel learned all too well last week, planning, preparation and execution must all match for success to be achieved. (See the ESPN smack.)
I couldn’t do an end-of-year blog without expressing gratitude for the many gifts that my family, friends and Technoform enjoy; talking a bit about those who don’t have some of the gifts that we do; and wishing you all a wonderful holiday season.
Last Saturday, I volunteered at a community event to buy back toy guns from inner-city kids held at the Boys and Girls Club of Cleveland. The Cleveland Prosecutors Office, Inner Visions of Cleveland, and several other community organizations sponsored the event. The goals of the event were to educate inner city youth about conducting themselves peacefully and positively, and to envision positive role models through writing essays. Essay contest winners get written into a comic book series that teaches sustainable life and environmental choices as part of community-based education programs. What struck me about this event is there are so many people doing good work in this world that it’s just amazing. Two of my pictures from this inaugural event are below, with more planned in 2015.
From my family to yours, I hope that gratitude radiates into what we do, and all the people we touch, during the holiday season and coming year.
Happy Holidays and New Year!
Links and Resources:
College Football Playoff, http://www.collegefootballplayoff.com
Cleveland Browns, http://www.clevelandbrowns.com/
Cincinnati Bengals, http://www.bengals.com/
AAMA 2013/2014 Study of the U.S. Market for Windows, Doors and Skylights, http://pubstore.aamanet.org/pubstore/ProductResults.asp?cat=0&src=IMS-14
Bureau of Labor Statistics:
Producer Price Index, http://www.bls.gov/ppi/
Jobs Openings and Labor Turnover Survey (JOLTS), http://www.bls.gov/news.release/pdf/jolts.pdf
The Associated General Contractors of America, http://www.agc.org/
AIA Architectural Billings Index, http://www.aia.org/practicing/economics/AIAS076265
ESPN story, http://espn.go.com/nfl/story/_/id/12033654/johnny-manziel-says-cleveland-browns-debut-was-worst-game-football-career
Boys and Girls Club of Cleveland, http://www.clevekids.org/
Cleveland Prosecutors Office, http://www.city.cleveland.oh.us/CityofCleveland/Home/Government/CityAgencies/Law/Agencies
Inner Visions of Cleveland, http://www.innervisionsofcleveland.org/