Energy and commodity prices have declined lately, offsetting the spike in metals and leaving the Dow Jones Commodities Index relatively flat.
Construction Dollar Volume has increased by 5.4% year over year (Dec 16/Dec 17). Year over year growth can be attributed to Residential (10.6%) and Infrastructure (3.4%) spending. Non-Residential spending has reversed its downward trend from Q3 and is up 1.9% year over year.
The New York Stock Exchange continues to reach all-time highs, with Q4 yielding a 4.9% increase in equities. Improving equity markets provide capital and investment spending for construction.
Monthly rolling average job growth at the end of Q4 sits at 171,000 jobs, showing a continuation of the downward shift from the 249,000 jobs rolling average seen in the second half of 2014. Q4 did, however, exhibit an improvement over Q3 with the 38,000 jobs added in September.
In view of realized and expected labor market conditions and inflation, the Federal Reserve Open Market Committee decided to maintain the target range for the federal funds rate at 1-1/4 to 1‑1/2 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market conditions and a sustained return to 2 percent inflation.
We are at full employment in the US construction sector. The first 3 quarters of 2017 has added 176,000 construction jobs nation-wide or 2.5%. Wage and profit increases in the sector will continue to draw employment from new entrants and other sectors. This will have a moderating effect on price increases. Continued weakness in nonresidential construction spending is expected to result in a reduced escalation in this sector.
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