Yesterday was a big day for construction economic news. First, the U.S. Census Bureau reported that construction spending increased 0.7% in December, from an adjusted $1.23 trillion figure in November to $1.24 trillion in December 2017. On a year-over-year basis, 2017 saw a 3.8% increase in construction spending. While this was the smallest percentage increase in six years, it is still a healthy number. The strong construction market is due to many reasons, among them a strong employment market, low interest rates and post-natural disaster (floods, fires) reconstruction.
Building on the strong employment market, the construction industry, according to the U.S. Bureau of labor Statistics, added net 36,000 new jobs in January 2018. This figure is included in the 226,000 new jobs added over the past 12 months. 3,600 of the new jobs created in January were in the heavy-civil sector which, according to Associated Builders and Contractors (ABC) Chief Economist Anirban Basu, could be an early signal of public infrastructure spending.
Lastly, Bill McBride at the Calculated risk blog reports that framing lumber prices are up significantly over the past year. Random Lengths lumber costs are up 31% from a year ago, while CME (Chicago Mercantile Exchange) futures are up 39% year-over-year. The prices are now higher than the housing bubble prices of 2010 and another bubble price in 2013.