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The current surge in construction materials prices is similar in scale to the initial period of the steep price rises in 2004-05. This is ominous, says Jim Haughey, chief economist for Reed Construction Data.
The U.S. economy downsized by 49,000 jobs in May 2008, according to today’s report on labor markets released by the U.S. Bureau of Labor Statistics. That brings total job losses for the year to 324,000. At the same time, the unemployment rate has climbed to 5.5%. The last time the jobless rate was that high was in October 2004. This report, with accompanying charts, examines what has been happening in key labor market sub-sectors.
Among four types of recreational structures monitored by RSMeans, a racquetball court (+4.6% on average for 25 cities) had the greatest year-over-year increase in construction costs in May 2008. In second place was an enclosed swimming pool (+3.9%), followed by a bowling alley (+3.0%) and a hockey/soccer arena (+2.9%).As for dollar-per-square-foot cost of construction, a swimming pool is most expensive. Chicago and Los Angeles were the leaders in cost gains, year over year.
Jim Haughey says that financial markets were relatively calm over the past month. The policy set federal funds and prime bank rates moved down about 20 basis points while market interest rates moved up about 20 basis points bringing the two sets of rates into a more normal relationship which typically suggests no significant rate changes are expected in the next few months.
Reed Construction Data Chief Economist Jim Haughey says that construction equipment orders were sharply higher in the last two months and equipment shipments edged up slightly to highest total in nearly a year and a half based on April activity reports and the annual revision of manufacturing shipments.
Jim Haughey says that nonresidential construction activity continues at a high level but has not expanded since last fall, after adjusting for project cost inflation, except for the construction of manufacturing facilities.
Jim Haughey discusses how starts, permits and new home sales increased in April for the first time in many months, confirming that the housing market is stabilizing at the job site although not yet downstream in the real estate market.
Jim Haughey says that total construction spending fell 0.4% in April after it was revised up 0.6% in March and remains 8.4% below the peak level in February 2006. Almost half of the decline occurred since last September when residential mortgage problems began to slow growth in nonresidential construction markets.
Gypsum board has been used extensively over the last 50 years as the interior wall surface material of choice. Gypsum board typically consists of a layer of gypsum with a layer of special paper on each face. It is inexpensive, easily installed, and accommodates a wide range of surface treatments, including paints and wall coverings.
Over the past six months, the economic after-effects of the sub-prime mortgage crisis have become increasingly evident in Memphis.
