Construction Insider: New USMCA deal, bigger construction spending, more

Blog

January Construction Insider: New USMCA trade deal, more construction jobs, more

January Construction Insider: New USMCA trade deal, more construction jobs, more

February 2, 2020

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

Trump signs USMCA Trade Pact

President Donald Trump has signed the US-Mexico-Canada Agreement (USMCA), which could pave the way for more affordable housing and a better economy, according to the National Home Builders Association (NHBA). NHBA

  • The NHBA commended Trump’s signing of the USMCA in January and celebrated the president for “working tirelessly [to sign] this landmark trade deal.”
  • “By adding new jobs, boosting wages for American workers, and including provisions to lower the costs of materials needed to build and repair homes, this trade pact is a positive step forward to ease America’s housing affordability challenges,” said NAHB Chairman Dean Mon in a statement.
  • Building materials for US residential construction are primarily sourced from Mexico and Canada. The USMCA is expected to offset the housing affordability woes due to the price volatility of imported construction materials.
  • The USMCA supersedes the 25-year old North American Free Trade Agreement (NAFTA).

Construction added 20,000 jobs in December

Around 20,000 new construction jobs opened in December despite a reported increase in the unemployment rate, according to the Bureau of Labor Statistics (BLS). ENR

  • The unemployment rate increased from 4.4% to 5.0% in December 2019, according to the BLS report that was released January 10.
  • The BLR report does not adjust for seasonal variations and ENR notes that construction employment tends to decrease in winter months.
  • Despite the increase in the unemployment rate, nearly all construction sectors added new job opportunities in December. The non-residential specialty trade sector expanded by 5,100 positions based on BLS data.
  • The 5.0% increase in the unemployment rate was the lowest in 20 years based on BLS data, said Associated General Contractors of America chief economist Ken Simonson.

Housing sector boosts US construction spending

US housing starts rose more than expected in the last quarter of 2019 while construction spending among builders also increased. Yahoo! Finance

  • The Commerce Department reported a 0.6% increase in construction spending in November. They also revised the data for October and September to reflect the increase, reversing previous forecasts of contractions for those months.
  • The rise in November’s construction spending was reportedly driven by the 1.9% increase in private residential construction.
  • Public construction spending also improved by 0.9% in November 2019. State and local construction projects registered a 0.8% increase while federal government construction projects reportedly rose by 1.7%.

Slow growth recorded for building materials cost

Prices paid for residential construction materials grew by only 0.2% in December 2019, according to the National Association of Home Builders (NAHB). LBM Journal

  • On average, the increase in building materials prices was only 0.1% per month last year, and the overall increase for residential construction was only 1.5%.
  • The marginal price growth last year was reportedly the lowest since 2015, the most recent year when prices advanced by less than 1.5%.
  • Prices of softwood lumber specifically grew by only 0.1% in December, according to the Producer Price Index (PPI) report cited by NAHB. The PPI data does not include the direct effects of the 20% tariff on Canadian lumber.

Trump unveils plan to speed up project permitting process

The White House unveiled its plan to speed up the process for securing permits for major infrastructure projects, including oil pipelines and road expansions. Reuters

  • The plan was revealed by the White House Council on Environmental Quality. The proposed update to the permitting process is considered to be one of Trump’s biggest deregulatory policies to date.
  • “We are issuing a new rule under the National Environmental Policy Act (NEPA) to completely overhaul the dysfunctional bureaucratic system that has created these massive obstructions,” said Trump at a White House press conference in January.
  • The proposal would assign one federal agency to oversee the review process of project approvals, instead of making multiple agencies in charge of conducting environmental impact studies.
  • The proposed rule would also not require federal agencies to consider “cumulative impacts,” including effects on climate change, when approving projects for permits.