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Weekly Roundup: June construction spending, construction cost’s threat to economy, & more

Weekly Roundup: June construction spending, construction cost’s threat to economy, & more

August 5, 2019

Construction Insider is a weekly roundup of the latest news and insights in construction.

US construction drops by a 7-month low of 1.3%

The decrease in private construction investment has caused US construction to fall by 1.3%, the steepest decline posted since last November. Reuters

  • The Commerce Department said that investments in private construction projects fell by 0.4% to $962.9 billion, the lowest value since October 2017.
  • Reuters conducted an earlier poll among economists which predicted a 0.3% construction spending increase in June. The actual year-over-year value recorded showed a 2.1% decrease instead.
  • Meanwhile, federal government construction outlays was boosted back to 2.6% after a 5.6% decline in June.

Labor strike forces lumber company to cease production

Western Forest Products (Western) temporarily stopped production due to the labor strike conducted by United Steelworkers since July 1. Woodworking Network

  • Over 1,500 hourly employees and 1,500 contracting employees from Western have joined the strike after union negotiations have broken down in July.
  • The union seeks better wages and benefits and disagrees on the implementation of a new drug and alcohol policy.
  • Western CEO Don Demens expressed disappointment in a statement, saying that the union canceled bargaining sessions and refused mediations.

Steep construction costs pose a threat to US economy

Bloomberg columnist Noah Smith said in a column that the rising costs of US construction may pose a threat to the US economy in the long run. FleetOwner

  • Smith predicts that the high costs could lead local and state governments to eventually allow the “decay” of infrastructure projects.
  • Construction of highways, streets, and other similar infrastructure has already started declining in recent years, according to Bureau of Labor Statistics.
  •   Smith asserts that expensive labor, land, materials or planning are not causing the increase in construction costs.
  • “Consistent efforts by policymakers and constant monitoring by economists” are important to trace the cause of steep US construction, writes Smith.