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Economic Highlights
Construction Costs, Optimistic Outlook, Confidence Index and More...


Expectations for Business and Sales Conditions Continue to Improve
Marking the second-highest level in its 44-year history, the Index of Small Business Optimism, which is conducted by the National Federation of Independent Business, grew 3.7 points in November. Of the survey's 10 components, the biggest gains were 16 points in expected business conditions and 13 points in sales expectations. The Wells Fargo Security Group believes the overall improvement "suggests employment growth and business fixed investment should maintain strong momentum going into the new year."


Optimistic Outlook for Commercial Construction
The latest USG Corporation + U.S. Chamber of Commerce Commercial Construction Index showed that confidence in the commercial construction industry is strong, with 57% of contractors expecting to hire in the next six months and a large majority reported stable or increased revenue expectations in the next year. However, nearly 90% of contractors do not consider jobsites to be very efficient. The Q4 composite score is 74, up one point from Q3.


Constructions Costs Rise
A rise in construction input prices in November (+ 0.7%) put them at 5.6% over November of 2016, which is the largest expansion since November 2011, according to an Associated Builders and Contractors analysis of Bureau of Labor Statistics data. Crude petroleum prices increased 11% for the month and are 31% higher than this time last year.


Confidence Index Hits Nine-year High
The Dodge Momentum Index climbed 18.2 points in November, after adding a robust 15.7 points in October. Standing at 149.5, the index is at its highest point since November 2008. According to an analysis by the Wells Fargo Securities Group, nonresidential construction will likely see "solid gains" in 2018, hampered somewhat by supply constraints.


Construction Backlog Points Out Robust Demand
A leading economic indicator that reflects the amount of construction work under contract but not yet completed, ABC's Construction Backlog Indicator increased to 9.45 months during the third quarter of 2017; the largest backlog in the eight-year history of the series. That is a jump of 9.8% from the second quarter and 9.2% growth year-over-year. A lengthening backlog indicates stronger construction demand.


Consumer Index Drops Slightly
The most recent reading from The University of Michigan Consumer Sentiment showed a small decrease from 98.5 at last count to 96.8, which is still not far off from the index's 10-year peak set in October. Higher inflation expectations were partly to blame.


Construction Jobs Increased
ABC also reported that the nation's construction sector added 24,000 net new jobs in November, representing a 0.3% month-over-month increase. Nonresidential construction employment added 8,600 net new jobs in November, after losing 3,600 net positions in October. The construction industry unemployment rate stands at 5% while the rate for all nonfarm industries is at 4.1%; a 17-year low.

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April 25, 2018, 3:13 am PDT

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Last Updated 04-23-18
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