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Reed Construction Data:News : US
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August’s U.S. labor market report may provide a spark of confidence
Today’s jobs market report from the Bureau of Labor Statistics may provide a much needed spark of confidence for the U.S. economy, especially its workers and
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Stocks and homes turn in similar lackluster price performances over past year
According to North America’s four major stock market indices, equity prices have been moving sideways for almost a year. There was a spurt in April 2010, when 52-week highs were recorded, but there have been mainly double-digit percentage declines since then, taking index levels back to where they were in October-November 2009. The exception on the plus side has been the Toronto Stock Exchange (TSE), which has benefited from a firming up of some commodity prices and, most recently, a takeover bid for Potash Corp. of Saskatchewan by BHP Billiton of Australia.
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Economic Expansion Stalls in July
Although most states had marginal gains in their economic activity index in July activity was weaker or steady in enough states to keep the national economic activity index unchanged. The stall is expected to be brief since it is the aftershock from the expiration of homebuyer tax credit and the ebbing of many of the federal pump priming spending programs, says Reed Construction Data chief economist Jim Haughey.
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Ranking States by Recent Economic Performance – July 2010
This chart shows the ranking of states by recent economic performance, including data on the last three months (annualized – July) and changes in economic activity for the latest three months (annualized) versus the previous year.
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Lumber, Metals, and Gypsum Lead July Construction Materials Price Decline
The economic slowdown caused the second consecutive decline in the construction materials price index with a 1.1% fall in July. The largest declines were for steel, copper, lumber and gypsum products. Most construction items experienced price declines in July. Weaker pricing, however, did not reach some lumber, energy and metal products by the survey week (2nd week in July). The only significant price increase from June was a 1.2% rise in construction equipment rental rates. This is more likely random than a new trend and may be due to the impact of the Gulf oil cleanup since oilfield equipment is included in the index.
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The margin of error for the U.S. economy is narrowing
U.S. economic growth in 2010’s second quarter has been revised down to 1.6% by the Bureau of Economic Analysis (BEA). In the BEA’s first estimate for Q2 – also known as the advance estimate – the figure was a higher 2.4%. The +1.6% is less than half of the first quarter’s +3.7%.
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A spate of bad news about U.S. housing but watch for American resilience
The U.S. has recently received an additional spate of bad news concerning its housing market. Since the expiry of the tax credit on April 30th, homebuyers have become an endangered species and both developers and real estate professionals are finding it a hard scrabble to make sales. American businessmen and consumers have talked themselves into a real funk. But one should never discount Americans’ resilience. This will eventually come to the fore, even if it has to be later rather than sooner.
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Housing Recovery Stalls
Housing market drivers remained generally positive through June, except for inventory for sale, but all signs point to a significant summer slowdown, probably with some decline, after the expiration of the homebuyer tax credit. This was expected and does not signal a new trend in the housing market. The summer pause will be brief — just long enough to get past the recent pull forward of homebuyers caused by the tax credit, says Reed Construction Data chief economist Jim Haughey.
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Nonresidential: Commercial Environment Improves; Institutional Environment Worsens
Commercial construction starts and spending are still slipping but most of the decline is now over so there are spot upward spikes occurring. But none are yet sustainable at the national level. Market drivers are now balanced between positive and negative. Credit conditions are improving marginally. Credit rates are very low and FRB statements assure that they will stay low well until late 2011, says Reed Construction Data chief economist Jim Haughey.
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Heavy Construction Spending Still Stalled
The heavy construction market remains stalled. Although jobsite spending increased 2.0% in June the gain was only back to last June’s level. The only two positive market drivers are construction equipment shipments and airline passenger traffic. The recent strong gain in equipment is heavily exports. Some of the gain also reflects rental fleet rebuilding after several lean years. Equipment usage on job sites is not yet causing a rise in equipment purchases, says Reed Construction Data chief economist Jim Haughey.
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