Industry Outlook

Glazing-Related Employment Climbs in September

September saw healthy construction employment numbers. According to a Key Media & Research (KMR) analysis of the Bureau of Labor Statistics data, the nonresidential specialty trades contractors sector increased employment by 4.6 percent from September 2017 to September 2018. Employment in that group, which includes glaziers, ironworkers and building exterior contractors, increased 0.4 percent from August to September.

Also according to the BLS report, overall construction employment was up 1.5 percent during the past 12 months, and average hourly earnings in construction are up 3.1 percent from a year earlier.

Dodge Momentum Index Moves Lower in September

The Dodge Momentum Index dropped 2.6 percent in September to 159.5 (the year 2000=100) from the re-vised August reading of 163.7. The momentum index is a monthly measure of the first (or initial) report for noresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.

Both components of the momentum index were lower in September: The commercial component fell 4.3 percent, while the institutional component lost 0.1 per-cent. The momentum index has now fallen for two consecutive months; however, due to a very strong reading in July it increased 0.8 percent from the second quarter to the third quarter.

The momentum index may seem to have lost some impetus, but this can be attributed to outsized gains in the late spring and summer. In fact, the momentum index is now returning to a more sustainable level of activity given the overall age of the current construction cycle.

Associated Builders and Con-tractors reports that its Construction Backlog Indicator expanded to a record 9.9 months during the second quarter of 2018. Backlog is up 12.2 percent from the first quarter and 14 percent compared to the same time last year.

“Construction backlog has never been higher in the history of this series,” says ABC chief economist Anirban Basu. “During the first quarter we noted that there had been a significant uptick in survey participation that could have affected our findings due to shifting participant composition. The second quarter was also characterized by elevated participation levels. It appears that higher participation is now the norm, and that the addition of survey participants has only served to render CBI a more reliable indicator.”

Backlog in the commercial/institutional segment rebounded during the second quarter, increasing to 10.1 months. Backlog in this segment is up more than 20 percent from the second quarter of 2017. This is remarkable given expectations prevailing a year ago. Back then, many worried that a number of commercial segments had become overbuilt, at least in certain geographies. This suggested that backlog was vulnerable, with fewer new projects moving from the drawing board to construction. Instead, the accelerated growth of the U.S. economy has further bolstered demand for commercial space, driving up the segment’s construction backlog in the process.

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