Tentative deal reached to avoid rail strike

President Joe Biden has announced a tentative deal between railroads and labor unions to avoid a strike. "For the American people, the hard work done to reach this tentative agreement means that our economy can avert the significant damage any shutdown would have brought," Biden says.

Full Story: USA Today  The Wall Street Journal  CNN

 

CPI for all items rises 0.1% in August as shelter and food increase, gasoline falls

In August, the Consumer Price Index for All Urban Consumers increased 0.1 percent, seasonally adjusted, and rose 8.3 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.6 percent in August (SA); up 6.3 percent over the year (NSA). 

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Large rate hike still expected despite slower inflation

The August inflation rate is expected to show an 8.1% year-on-year rise, which would represent the second consecutive monthly deceleration, but few industry participants expect the data to dissuade the Federal Reserve from announcing a further 75 basis point rate rise this month. Sarah House, a senior economist at Wells Fargo, said the Fed will view the figure as still too high, and commented: "It's a step in the right direction, but there remains a long road ahead." Full Story: Bloomberg  Financial Times (subscription required)

 

Fitch Ratings: Expect a recession next year

Continued monetary tightening will probably cause a recession next year, Fitch Ratings forecasts. Fitch cites declining corporate profits and predicts the trend will pick up in coming months as more companies revise their guidance downward. Full Story: CFO Dive   

Armed with steady backlogs, nonresidential construction pros shrug off recession fears

Nonresidential contractor confidence rose in August and backlog held steady as builders shook off fears of a looming recession, according to Associated Builders and Contractors, despite evidence the Federal Reserve will need to escalate its war on inflation even more via ever higher interest rates. The ABC’s Construction Backlog Indicator, which measures the months of work contractors have won but haven’t yet started, held at 8.7 months in August, the same level as July and a full month higher than August 2021. The sustained level came amid increases in the commercial and institutional sector, as well as heavy industrial projects, even as the bookings for infrastructure projects fell. The results helped buoy contractors’ optimism for sales, staffing — and most tellingly, profit margins — over the next six months, all of which rose from July’s reading, though they were still below year-ago levels. Profit expectations have been hampered this year by continued inflation and higher staffing costs. 

Study: US workforce shrinks by 500,000 due to COVID-19

An academic study estimates the US workforce would currently have 500,000 more workers were it not for the effects of the coronavirus pandemic. MIT's Evan Soltas, one of the authors of the study, said, "If we stay where we are with Covid infection rates going forward, we expect that 500,000-person loss to persist until either exposure goes down or severity goes down." Full Story: The Wall Street Journal  

Construction input prices fall for second straight month

Nonresidential construction input prices dipped for a second consecutive month in August, providing more evidence that construction material costs peaked in June and supporting newfound optimism in the sector.  Prices for steel mill products, crude petroleum and softwood lumber were down 5.7%, 5.3% and 3.1%, respectively, for the month, while cost for all nonresidential supplies moderated 1.4%, according to an Associated Builders and Contractors analysis of Bureau of Labor Statistics producer price index data.  That builds on momentum from July, when nonresidential input prices fell 1.8% after rising by the same amount in June. For the year, however, the prices for products that go into nonresidential structures and other construction projects are still up 16.7%, ABC said.  

Contractor input prices up 13% year over year in Aug.

The price surge for materials and services in nonresidential construction cooled in August from July with a 1.1% decline, according to an Associated General Contractors of America analysis of federal data. However, prices were still up 13% year over year in August, and AGC noted many contractors are still struggling with supply chain and labor issues. Full Story: The Construction Broadsheet 

San Francisco sees drop in big-ticket construction

Construction tradespeople are finding work scarce on big-ticket projects in downtown San Francisco, a problem that industry leaders attribute to a decline in tenant improvement projects related to office leases. Permit filings for projects valued at more than $5 million totaled 42 in August, and if the current pace continues, 2022 permitting activity in the city won't be as strong as it was last year. Full Story: San Francisco Chronicle (tiered subscription model) 

OSHA expands severe violator program

The Department of Labor is updating the criteria for OSHA’s Severe Violator Enforcement Program, expanding it to include violations of all hazards and standards across all industries.  Doug Parker, OSHA assistant secretary, said the agency’s past criteria were “unnecessarily artificial and were not reaching employers who were committing repeat willful violations.” OSHA estimates SVEP — which concentrates inspections on employers who have several willful, repeated or failure-to-abate violations —  includes roughly 500 employers currently. Parker estimated the changes would add 80 to 100 employers to the list each year, though he didn’t specify which industries they would come from.

 

PPI for final demand declines 0.1% in August; goods fall 1.2%, services increase 0.4%

The Producer Price Index for final demand fell 0.1 percent in August. Prices for final demand goods declined 1.2 percent, and the index for final demand services advanced 0.4 percent. Final demand prices moved up 8.7 percent for the 12 months ended in August. 

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August jobless rates up in 16 states; payroll jobs up in 10 states, down in 1 

In August, unemployment rates were higher in 16 states and stable in 34 states and the District of Columbia. Nonfarm payroll employment increased in 10 states, decreased in 1 state, and was essentially unchanged in 39 states and the District. 

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Construction planning numbers fall

Nonresidential construction planning dipped in August, providing a further sign that rising interest rates and fear of a pending recession is stalling upcoming projects. The Dodge Momentum Index, which broadly measures activity in the planning stages for new nonresidential building projects and leads spending in the sector by a full year, fell 1.2% in August. It was weighed down by a 5.2% decline in the institutional sector, which includes education, healthcare, transportation and public and religious buildings. Compared to a year ago, however, the index was still significantly positive, up 14% from August 2021. The commercial component, which includes retail, warehouses, office, hotels and parking garages, was 16% higher than 12 months earlier, with institutional projects 10% higher. 

10 trends to watch in construction

Sensors for safety, autonomous equipment and electrification are among the top 10 trends that the Association of Equipment Manufacturers sees developing in the construction industry. Erica Floyd reviews these and others, including fewer workers with different skill sets and new business models. Full Story: For Construction Pros 

Feds won’t enforce contractor COVID-19 vaccine mandate

The Biden administration will not enforce its mandate for federal contractors to be vaccinated against COVID-19, despite a recent ruling which blocked a previous injunction against it in half the states. According to a post on the General Services Administration’s COVID-19 Safer Federal Workforce website, the federal government will take no action to implement or enforce Executive Order 14042, which was issued on Sept. 9, 2021 and required federal contractors to get the vaccine. In order to comply with previous court rulings in ongoing litigation, the administration also said it wouldn’t enforce clauses in existing contracts to implement the requirements of the order “absent further written notice from the agency.”
 

IIJA funding to spur construction of wildlife crossings

The Infrastructure Investment and Jobs Act provides $350 million to help build wildlife crossings, and a number of states say they're planning to take advantage. The projects will help reduce the number of costly vehicle-animal strikes in the US. Full Story: Engineering News-Record (tiered subscription model)
 

Hotel developers gravitate to mixed-use projects

The likelihood that each component in a mixed-use project will enhance the value of others is proving attractive to hotel developers, even though such projects can add complications. Bryan Wroten reviews several current projects and feasibility factors for future projects, noting that real estate developers are also seeing advantages in mixed use. Full Story: CoStar Group
 

Construction group aims for wider use of BIM

The National Institute of Building Sciences is developing a whole-life-cycle standard for the application of building information modeling in a bid to boost digitization in the construction industry. Planning for the US National Building Information Management Program began last year with the broad aim of achieving improvements in the supply chain, process predictability, overall innovation and efficiency. Full Story: Construction Dive
 
Jacobs taps Pragada as next CEO

Jacobs Solutions announced Thursday Bob Pragada, current president and chief operating officer and a 16-year veteran of the company, will succeed Steve Demetriou as chief executive officer and join Jacobs’ board of directors. The changes are effective Jan. 24, 2023, the date of the company’s annual shareholder meeting. Demetriou will continue to serve as executive chair for a two-year minimum, advising Pragada on strategic and capital deployment initiatives as a member of Jacobs’ board of directors. 

Amazon cancels, delays dozens of warehouses as it looks to rightsize capacity

Amazon’s efforts to pull back the expansion of its fulfillment network have affected 66 active or planned U.S. facilities, according to MWPVL International, a consulting firm that tracks the e-commerce giant’s logistics footprint. The company’s cancellations, closures, delays or pauses impact 24.6 million square feet of ground-level space for fulfillment centers, delivery stations and other types of buildings across 28 states, MWPVL President and founder Marc Wulfraat said in a Sept. 6 email. Amazon still has 271 facilities with nearly 100 million total square feet in its pipeline, per MWPVL data. The company “is still opening up an astonishing amount of space this year — it’s just that they will open less space [than] originally planned,” Wulfraat said.

 

Grant advances $300M plan to reroute Calif. rail line

A plan to move train tracks off the crumbling Del Mar bluffs in Southern California is advancing with a grant of $300 million from the state. The project will also double-track the route from the San Dieguito Lagoon to the Sorrento Valley. Full Story: The San Diego Union-Tribune (tiered subscription model)

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Mark Smith, Advocate, California Builders Alliance 
5370 Elvas Avenue ǀ Sacramento, CA 95819
Cell: 916.335.5072
Email: mark.smith@calbuilders.org 
Email: mark@smithpolicygroup.com