US & CO Construction Spending, Labor and Materials Outlook

AGC/Public Owners Meeting

Denver January 24, 2018

Ken Simonson

Chief Economist, AGC of America

simonsonk@agc.org

Headline Forecast• The US economy is strong and growing:

- 3.5% third-quarter real GDP growth, rising employment and pay

- consumer, business confidence are generally high; recession probability is low

- but home & auto sales are slowing; trade & fiscal policy concerns remain

• Contractors remain busy and confident; construction employment at 10-year high but several spending categories have slipped or stalled in past few months

• Three concerns:

- impact of trade policies on materials costs and demand for construction

- widening labor shortage, worsened by hostile immigration policy

- rising interest rates may cut demand for income-producing projects, new homes

Source: Author

2

US/CO Net % who expect dollar volume of projects to be higher

17%/24% Public building 14%/26% Water/Sewer

16%/-3% Highway 13%/14% Private Office

16%/27% K-12 school 12%/-3% Manufacturing

16%/5% Hospital 11%/-2% Higher Education

15%/-2% Retail, Warehouse, Lodging 10%/6% Power

15%/12% Federal (e.g., VA, GSA, USACE, NAVFAC) 5%/-7% Multifamily Residential

14%/11% Transportation (e.g., transit, rail, airport)

3

3

AGC members’ expectations for 2019—US & CO

Source: AGC 2019 Outlook Survey, Jan. 2019

Construction spending & employment, 2006–2018

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

2006 2008 2010 2012 2014 2016 2018

10/17–10/18% change:

Total: 4.9%

Private res: 1.8%

Private nonres: 6.4%

Public: 8.5%

0

2

4

6

8

2006 2008 2010 2012 2014 2016 2018

10/17–10/18% change:Total: 4.7%

Nonres: 4.4%

Res: 5.3%

Spending put in place, Feb. ‘06 (prior peak)–Oct. ‘18trillion $, seasonally adjusted annual rate

Employment, April ’06 (peak)–Oct. ‘18millions, seasonally adjusted

10/18 Total: $1.31 trillion(9% above ‘06 peak)

Private residential(21% below ‘06 peak)

Public(5% below ‘09 peak)

Private nonresidential(11% above ‘08 peak)

Nonresidential(0.3% above ‘18 peak)

Residential (17% below ‘06 peak)

10/18 Total: 7.3 million(5% below peak)

4

Source: spending--U.S. Census Bureau; employment--Bureau of Labor Statistics

2017vs. 2016

Jan–Oct ’18 vs.Jan–Oct ’17 2019 forecast

Nonresidential total (public+private) -0.5% 5.2% 2-5%

Power (incl. oil & gas field structures, pipelines) -5 3 3-8%

Educational 1 3 0-5%

Highway and street -4 6 3-8%

Commercial (retail, warehouse, farm) 12 4 0-5%

Office -1 9 0-5%

Manufacturing -13 -3 near 0

Transportation 4 17 5-10%

Health care 4 1 near 0

Lodging 6 12 near 0

Sewage & waste disposal -12 9

Other--amusement; communication; religious; public safety; conservation; water: 11% of ‘17 total 3 6

Nonresidential spending by segment: 2017-2018 change and 2019 forecast

Source: U.S. Census Bureau construction spending report; Author’s forecast

5

'17 '18

$0

$10

$20

$30

'08 '16 '17 '18

Construction spending: industrial, heavyannual total, 2008–16; monthly (seasonally adjusted annual rate), 1/17–10/18; billion $

$0

$30

$60

$90

$120

'08 '16 '17 '18

Manufacturing (99% private in 2017)

Oct. ‘17–Oct. '18: 3% (chemical 1%; other 4%)

other

chemical

Communication (99.5% private in 2017)

Oct. ‘17–Oct. '18: -5%

Source: U.S. Census Bureau construction spending report

'17 '18

$0

$10

$20

$30

'08 '16

Amusement & recreation (55% private in 2017)

Oct. ‘17–Oct. '18: 16% (private 8%; public 28%)

public

private

Power (94% private in 2017)

$0

$30

$60

$90

$120

'08 '16

Oct. ‘17–Oct. '18: 9% (oil & gas 17%; electric 7%)

electric

oil & gas

6

total

total

total

Key points: power & energy, mfg, amusement, communication

• Solar, wind power are growing again; expect more gas-fired plants, natural gas pipelines in ‘19

• Manufacturing construction should recover further in ‘19 based on energy projects, U.S. economic growth; but tariffs, foreign retaliation, rising construction costs are major concerns

• Amusement & recreation spending is very “lumpy”—a few big stadiums at irregular intervals; but funding for local, state, federal parks keeps eroding

• Communication may revive as wireless firms build out 5G networksSource: Author

7

'17 '18

$0

$30

$60

$90

$120

'08 '16

$0

$10

$20

$30

'08 '16 '17 '18

Construction spending: public worksannual total, 2008–16; monthly (seasonally adjusted annual rate), 1/17–10/18; billion $

$0

$10

$20

$30

'08 '16 '17 '18

Highways (99.8% public in 2017)

Oct. ‘17–Oct. '18: 5%

Sewage/waste & water (sewage 99% public in 2017; water 98% public in 2017)

Oct. ‘17–Oct. '18: Sewage/waste 8%, water 23%

Conservation and development (99.7% public in 2017)

Oct. ‘17–Oct. '18: 0.5%

Source: U.S. Census Bureau construction spending report

$0

$20

$40

$60

'08 '16 '17 '18

Transportation facilities (air, transit, rail, water)

Oct. ‘17–Oct. '18: 13% (air 34%; other 1%)

air

other

8

total

sewage/waste

water

Key points: roads, transportation, sewer/water• State highway funding and P3s gradually increasing; no federal

infrastructure bill likely in 2019

• Many new and ongoing public & private airport projects; revival of freight rail construction; but no net increase likely in public funding for port, passenger rail or transit construction

• Water & sewer/wastewater spending returning to 2011-15 levels after large drop in 2016-17; little long-term new funding likely

• Conservation will grow if Corps of Engineers can award enough $

Source: Author

8

$0

$25

$50

$75

$100

'08 '16

$0

$10

$20

$30

$40

$50

'08 '16 '17 '18

Construction spending: education, health careannual total, 2008–16; monthly (seasonally adjusted annual rate), 1/17–10/18; billion $

'17 '18

Education: (state/local K-12, S/L higher; private)

Oct. ‘17–Oct. '18: 9% (state/local preK-12 12%; state/local higher ed 4%; private 8%)

state/local preK-12

private

state/local higher ed

Health care: (private hospital, S/L hospital, other)

Oct. ‘17–Oct. '18: -1% [private hospital 4%; S/L hospital 2%; other (special care, medical office, federal) -8%]

state/local hospital

private hospital

Source: U.S. Census Bureau construction spending report

total (78% public)total (78% private)

Other

10

Key points: education & health care• Rising house & commercial property values are supporting school district

tax receipts & bond issues for preK-12 projects

• Higher-ed enrollment declined 21% from 2011 to 2016; likely decrease in full-tuition foreign students will hurt budgets; apts. (multifamily) replacing dorms (educational construction)

• Rising stock prices help private school & college capital campaigns

• Despite recent rebound in hospital spending, health care spending is shifting to special-care facilities (urgent care, surgery, rehab, hospices)

Source: Author

11

'17 '18

$0

$20

$40

$60

$80

'08 '16

Construction spending: developer-financedannual total, 2008–16; monthly (seasonally adjusted annual rate), 1/17–10/18; billion $

$0

$20

$40

$60

$80

'08 '16 '17 '18

$0

$10

$20

$30

$40

'08 '16 '17 '18

Retail (private)

Oct. ‘17–Oct. '18: -9%

Office (88% private in 2017)

Oct. ‘17–Oct. '18 : 15% (private 16%; public 5%)

Public

Private

Total

Warehouse (private)

Oct. ‘17–Oct. '18: 14%

Lodging (private)

Source: U.S. Census Bureau construction spending report

$0

$10

$20

$30

$40

'08 '16 '17 '18

Oct. ‘17–Oct. '18: 18%

12

Key points: retail, warehouse, office, hotel, data centers

• Retail now tied to mixed-use buildings & renovations, not standalone structures; ongoing store closings imply downturn continuing in ‘19

• Warehouse growth is still benefiting from e-commerce; more local than huge regional distribution centers likely in future; self-storage is booming

• Office growth is slowing; employment still rising but space per worker is shrinking; more urban & renovation work than suburban office parks

• Hotel pipeline is still growing but sector is very interest-rate sensitive

• Data centers remain a strong niche but no data available on how strong

Source: Author

13

Private residential spending: slower single-family growth, pickup in multifamilyannual total, 2006–16; monthly (seasonally adjusted annual rate), 1/17–10/18; billion $

'17 '18

Spending put in place (billion $)

Multifamily(1% below Mar ‘16 peak)

Source: U.S. Census Bureau construction spending report

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

2017 2018

12

mo

nth

% c

han

ge

Improvements: 0.4%

Single-family: 2%Multifamily: 3%

Private total: 2%

12-month % change

Private residential total(18% below Feb ‘06 peak)

Single-family(40% below Feb ‘06 peak)

Improvements(10% below Apr ‘18 peak)

10/17–10/18:

14

$0

$100

$200

$300

$400

$500

$600

'06 '16

Residential spending forecast--2018: 5-6% growth; 2019: 5-9% (12% in 2017)

• SF--2018: 6-7% growth; 2019: 6-10% (11% in 2017); rising interest rates, building costs, student debt will limit number of potential buyers

• MF--2018: near 0; 2019: 2-5% (-2% in 2017)

– occupancy rates, rents have leveled off; but permits are rising, implying rebound in 2019

– millennials are staying longer in cities and denser suburbs where MF construction is bigger share of market than in outer suburbs

– nearly all MF construction is rental, not condo; more high-rises

• Improvements--2018: 6-8% growth; 2018: 5-10% (19% in 2017); rising number of seniors prefer remodeling to moving but interest cost, labor scarcity are barriers

Source: Author

15

Population change by state, July 2017–July 2018 (U.S.: 0.62%)

AK -0.3%

1.5%

1.1%

0.4%

2.1%

0.9%

-0.2%

2.1%

1.7%

1.4%

0.1%

0.6%

1.0%

0.6%

0.0%

0.3%

1.3%

0.8%

0.4%

0.3%

-0.2%

0.4%

-0.4%

0.2%

0.5%

0.3%

-0.1% 0.3%

0.2%

-0.3%

0.1%

0.6%

1.1%

1.0%

1.5%

0.3%

-0.6%

0.4%

1.9%

HI-0.3%

1.3%

VT0.3%

CT-0.03%

RI0.1%

DE1.0%

NJ0.2%

MD0.3%

DC1.0%

NH0.5%

decrease 0-0.49% 0.5-0.99% 1.0-1.49%

MA0.6%

1.5%+

Source: U.S. Census Bureau

0.9%

16

CT17%

-3%

4%

8%

3%

1%

4%

15%

12%

12%

-0.1%

6%

12%

9%

5%

1%

1%

6%

5%

7%

-1%

2%

7%

2%

7%

10%

3%

0% 4%

7%

4%

0.4%

4%

11%

7%

-2%

3%

4%

1%

HI-4%

-5%

VT2%

MD2%

DC3%

NH9%

Over -10% -5.1% to -10% -0.1% to -5% 0.1% to 5%

MA2%

State construction employment change (U.S.: 4.0%) 12/17 to 12/18: 43 states and DC up, 6 down

5.1% to 10% Over 10%

Shading based on unrounded numbers

0%

Source: BLS state and regional employment report

4%NJ

0.1%DE7%

RI5%

3%

17

Top 5

CT 16.9%

WY 14.9%

AR 12.5%

NV 12.3%

ND 11.6%

Bottom 5MO -1.0%

ME -2.1%

AK -2.5%

HI -4.8%

SC -5.0%

Metro construction employment change (U.S.: 4.0%) 12/17 to 12/18: 273 (78%) of 358 metros up, 48 unchanged, 37 (12%) down

Source: BLS state and regional employment report

18

Top 5Weirton-Steubenville, WV-OH 28%

Hartford-West Hartford-East Hartford, CT NECTA 23%

Bridgeport-Stamford-Norwalk, CT NECTA 23%

Lewiston, ID-WA 23%

Detroit-Dearborn-Livonia, MI Div. 20%

Bottom 5Lawrence-Methuen Town-Salem, MA-NH NECTA Div. -9%

Abilene, TX -7%

Wichita Falls, TX -7%

Elmira, NY -7%

Charleston, WV -6%

Over -10% -5.1% to -10% -0.1% to -5% 0.1% to 5% 5.1% to 10% Over 10%0%

0

20

40

60

80

100

120

140

160

180

200

1990 1995 2000 2005 2010 2015

In t

ho

usa

nd

s

Colorado Construction Employment1/90–12/18 (seasonally adjusted; shading = recessions)

Source: BLS

19

Peak: Feb ‘18

172,700

-0.1%169,5001% below peak

12/17–12/18

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

2008 2010 2012 2014 2016 2018

12

-mo

nth

% c

han

ge

Construction Employment Change from Year Ago1/08–12/18 (not seasonally adjusted)

Colorado 2.4%

Source: BLS

20

Denver-Aurora-Lakewood* 2.1%

U.S. 4.1%

12/17–12/18:

*The Bureau of Labor Statistics combines construction, mining and logging employment for metro areas in which mining and logging have few employers.

Change in construction employment, 12/17–12/18 (NSA)

Source: AGC rankings, calculated from BLS state and area employment reports

21

Metro area or division12-mo. empl.change (NSA)

Rank (out of 358)

Statewide (Construction) 0%

Statewide (Mining, logging, and construction)* 2%

Boulder* 7% 91

Colorado Springs* 7% 91

Denver-Aurora-Lakewood* 2% 239

Fort Collins* 6% 113

Grand Junction* 5% 150

Greeley* 7% 91

Pueblo* 3% 205*The Bureau of Labor Statistics combines construction, mining and logging employment for metro areas in which mining and logging have few employers. To allow comparisons between states and their metros, not seasonally adjusted statewide data is shown for both construction-only and combined employment change.

Construction employment change by CO metro, 7/17–7/18

22

Over -10%

-5.1% to -10%

-0.1% to -5%

0.1% to 5%

5.1% to 10%

Over 10%

Shading based on unrounded numbers

0%

Source: BLS state and regional employment report

22

Greeley

Colorado Springs

Denver-Aurora-Lakewood

Pueblo

Grand Junction

Fort Collins

Boulder

278,000

375,000

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Unemployment

Openings

11/18

3.6%3.7%

0%

1%

2%

3%

4%

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

12-mo % change in construction average hourly earnings

Job openings rate in construction

11/18

Construction job openings rate has been growing as pay accelerates (Nov. data, 2009-18)

Construction workforce indicators (not seasonally adjusted)

Source: Bureau of Labor Statistics

Construction openings: all-time high; unemployment: all-time low (Nov. data, 2009-18)

23

Outlook 2019: Over 4 out of 5 CO firmsexpect to increase headcount in 2019

Source: AGC 2019 Outlook Survey, Jan. 2019

24

13%

84%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Decrease

No change

Increase

Outlook 2019: CO Firms with staffing challenges face higher costs and delays

Source: AGC 2019 Outlook Survey, Jan. 2019

25

15%

28%

38%

47%

32%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

No impact/Stay the same

We have put longer completion times intoour bids or contracts

We have put higher prices into our bids orcontracts

Projects have taken longer than weanticipated

Costs have been higher than weanticipated

12-month change in producer price index for key inputs

Source: Bureau of Labor Statistics

9%

41%

10%

8%

5%

6%

19%

0% 10% 20% 30% 40% 50%

Copper & brass millshapes

Diesel fuel

Aluminum mill shapes

Steel mill products

December 2017–December 2018 December 2016–December 2017

-6%

11%

6%

3%

3%

3%

10%

0% 10% 20% 30% 40% 50%

Lumber &plywood

Gypsumproducts

Ready-mixedconcrete

Pavingmixtures

-4%

0%

26

5.3%

3.8%

3.9%

-2%

0%

2%

4%

6%

8%

2016 2017 2018

12

mo

nth

% c

han

ge

Materials & labor costs are rising faster than bid prices

PPI for inputs to construction

Average hourly earnings for all construction employees

PPI for nonresidential building

12-month % change, not seasonally adjusted: Jan. 2016 – Dec. 2018

Source: Bureau of Labor Statistics

12/17–12/18

27

2017-2018 summary and 2019 forecast

*Jan.-Oct. 2017 to Jan.-Oct. 2018

2017actual

2018actual

2019 forecast

Total spending 4% 5.1%* 5-8%

Private – residential 12% 5%* 5-9%

– nonresidential 1% 4%* 3-6%

Public -3% 7%* 2-5%

Goods & services inputs PPI 4.4% 3.8% 4-6%

Wages & salaries (avg. hourly earnings) 3.1% 3.7% 3.5-4.5%

28

AGC economic resources(email simonsonk@agc.org)

• The Data DIGest: weekly 1-page email (subscribe at http://store.agc.org)

• monthly press releases: spending; producer price indexes; national, state, metro employment with rankings

• yearly employment & outlook surveys, state and metro data, fact sheets: www.agc.org/learn/construction-data

29

Source: Ken Simonson, Chief Economist, AGC of America, simonsonk@agc.org, from Bureau of Economic Analysis (GDP); Census Bureau (spending,

small business); ConstructConnect (starts); Bureau of Labor Statistics (jobs, pay, occupations); AGC (rankings, workforce survey). November 30, 2018

The Economic Impact of Construction in the United States and Colorado

Economic Impact of Construction:

• U.S. gross domestic product (GDP)—the value of all goods and services produced in the country—totaled $19.3 trillion in 2017; construction contributed $826 billion (4.3%). In Colorado, construction contributed $20.4 billion (5.9%) of the state’s GDP of $343 billion, more than the industry’s 4.3% share of U.S. GDP.

• Construction wages and salaries in 2017 totaled $436 billion in the United States, including $10.1 billion in Colorado.

Nonresidential Construction Spending:

• Nonresidential spending in the U.S. totaled $714 billion in 2017 ($438 billion private, $277 billion public).

• Private nonresidential spending in Colorado totaled $7.5 billion in 2017. State and local spending totaled $6.5 billion.

• Nonresidential starts in Colorado totaled $8.3 billion in 2017 and $6.4 billion in 2016, according to ConstructConnect.

Construction Employment (Seasonally Adjusted):

• Construction (residential + nonresidential) employed 7.3 million workers in October 2018, an increase of 330,000 (4.7%) from October 2017, but 5.3% less than in April 2006, when U.S. construction employment peaked.

• Construction employment in Colorado in October 2018 totaled 171,500, an increase of 4.3% from October 2017, but 1% less than the state's peak in February 2018.

• Construction unemployment is near a series low. In AGC’s August 2018 workforce survey, 80% of firms in the U.S. and 80% in Colorado reported difficulty filling hourly craft worker positions.

Construction Industry Pay:

• In 2017, pay for all construction industry employees in the U.S. averaged $60,700, 10% more than the average (mean) for all private-sector employees. Pay for construction industry employees in Colorado was $59,400 in 2017, 4% more than the state average for all private-sector employees.

• Four out of the five most numerous construction occupations in Colorado had higher median pay than the median for all employees in the state. (Half of workers earn more than the median; half earn less.)

Small Business: • The United States had 669,000 construction firms in 2015, of

which 92% were small (1 to 19 employees). Colorado had 16,900 construction firms in 2015, of which 92% were small.

5 most numerous construction jobs and median annual pay in Colorado

Occupation

Number of employees

Median annual pay

Pay relative to median

All occupations 2,555,300 $40,880 Construction Laborers 21,250 $34,850 -15% Electricians 15,070 $52,340 +28% First-Line Supervisors of Construction Trades and Extraction Workers 14,280 $66,490 +63% Carpenters 13,750 $43,910 +7% Operating Engineers and Other Construction Equipment Operators 9,950 $48,330 +18%

Empl. Change by Metro (not seasonally adjusted) Rank (out of 358) Metro area or division 10/17–10/18

Statewide (Construction) 4%

Statewide (Mining, logging, and construction)* 6%

Boulder* 8% 80

Colorado Springs* 7% 112

Denver-Aurora-Lakewood* 4% 197

Fort Collins* 7% 112

Grand Junction* 1% 272

Greeley* 13% 15

Pueblo* 3% 232

*The Bureau of Labor Statistics combines construction, mining and logging employment for metro areas in which mining and logging have few employers. To allow comparisons between states and their metros, not seasonally adjusted statewide data is shown for both construction-only and combined employment change.

0

50

100

150

200

1990 1995 2000 2005 2010 2015

In t

ho

usa

nd

s

-30%

-15%

0%

15%

30%

2008 2010 2012 2014 2016 2018

12

-mo

nth

% c

han

ge

Peak: Feb '18

U.S. 4.7% Colorado 4.3% (26 out of 51)

Colorado Construction Employment, 1/90–10/18 (seasonally adjusted; shading = recessions)

Construction Employment Change from Year Ago 1/08–10/18 (seasonally adjusted)

10/17–10/18

www.agc.org/learn/construction-data

Vol. 19, No. 3 · January 15-18, 2019

Construction employment increased in 43 states, D.C. in 2018; ‘bid price’ PPI rose 5.3%

Seasonally adjusted construction employment rose year-over-year (y/y) from December 2017 to December 2018 in 43

states and the District of Columbia, declined in six states and was unchanged in Mississippi, an AGC analysis of Bureau of

Labor Statistics data released today showed. Texas added the most construction jobs over the year (46,800 jobs, 6.4%), followed

by Florida (34,900, 6.7%), California (21,700, 2.6%), Georgia (21,500, 11%) and Arizona (18,900, 13%). Connecticut added

the highest percentage of construction jobs in 2018 (17%, 9,700 jobs), followed by Wyoming (15%, 2,900 jobs), Arizona,

Nevada (12%, 10,600) and North Dakota (11%, 2,900). Construction employment set a record high in five states: Nebraska,

New York, Oklahoma, Oregon and Texas. South Carolina shed the largest number and percentage of jobs (-5,100 jobs, -5.0%),

followed by Hawaii (-1,800, -4.8%) and New Jersey (-2,200, -1.4%). Construction employment increased from November to

December in 36 states, decreased in 11 and held steady in Alaska, Idaho, New Hampshire and D.C. (AGC’s rankings are based

on seasonally adjusted data, which in D.C., Hawaii and five other states is available only for construction, mining and logging

combined.)

The producer price index (PPI) for final demand in December, not seasonally adjusted, decreased 0.3% from November

but increased 2.5% y/y from December 2017, the Bureau of Labor Statistics (BLS) reported on Tuesday. AGC posted tables and

an explanation focusing on construction prices and costs. Final demand includes goods, services and five types of nonresidential

buildings that BLS says make up 31% of total construction. The PPI for new nonresidential building construction—a measure

of the price that contractors say they would charge to build a fixed set of buildings—was unchanged for the month but rose 5.3%

y/y, matching the November 2017-November 2018 change as the largest 12-month increase since the series began in June 2009.

Increases ranged from 4.1% y/y for warehouses to 4.5% for health care buildings, 5.6% for offices, 5.5% for schools and 5.9%

for industrial buildings. Increases in PPIs for subcontractors’ new, repair and maintenance work on nonresidential buildings

ranged from 0.6% y/y for roofing contractors to 4.8% for plumbing contractors, 5.0% for electrical contractors and 6.2% for

concrete contractors. The PPI for inputs to construction—excluding capital investment, labor and imports—comprises a mix

of goods (56%) and services (44%). This index decreased 0.8% for the month but increased 3.8% y/y, the second-straight month

in which the “bid price” PPI increased more than the input cost PPI. Increases for inputs to seven nonresidential structure types

were similar, ranging from 3.4% for power and communication structures to 4.6% for highways and streets. PPIs for inputs to

new residential structures rose 3.5% y/y for single-family and 3.9% for multifamily. The PPI for services inputs to construction

rose 4.4%, compared to a 3.7% increase in 2017. The index for goods inputs (including items consumed by contractors, such as

diesel fuel) climbed 3.5%, down from 5.0% in 2017, as the PPI for energy inputs fell 3.9% in 2018 after rising 21% in 2017. Th

PPI for goods less food and energy increased 4.8% in 2018, up from 3.3% in 2017. Inputs important to construction that had

large one- or 12-month price changes include steel mill products, down 0.9% for the month but up 19% y/y; diesel fuel, -12%

and 5.0% asphalt felts and coatings, 1.8% and 11%, respectively; asphalt paving mixtures and blocks, 0 and 10%; architectural

coatings, 0.3% and 7.2%; truck transportation of freight, 0.4% and 6.8%; aluminum mill shapes, -0.4% and 63%; insulation

materials, -0.5% and 5.1%; diesel fuel, -12% and 5.0%; and copper and brass mill shapes, 1.3% and -5.6%. Readers are invited

to send copies of price-change notices to simonsonk@agc.org.

“Spending on nonresidential buildings nationally is projected to grow by 4.4% this year, paced by healthy gains in the

industrial and institutional building sectors,” American Institute of Architects chief economist Kermit Baker wrote on

Wednesday, reporting the consensus of eight forecasts. “For 2020, growth is projected to slow to 2.4%, with essentially no

increase in spending on commercial facilities but gains in the 3% range in the industrial and institutional categories. Still, there

is growing concern inside and outside of the industry that a broader economic downturn may be materializing over the next 12

to 24 months. Continued healthy gains in construction activity in the near-term is the projection of the [panel. They] see the

2018 growth rate remaining essentially unchanged for this year. However, the composition will change significantly. Last year,

spending on commercial facilities increased around 7% while advancing by about half that rate for institutional buildings and

declining for the industrial sector. This year, gains in each of the major building sectors are expected to be in the 3-5% range.”

“Economic activity increased in most of the U.S., with eight of 12 Federal Reserve districts reporting modest to moderate

growth,” the Federal Reserve reported on Wednesday in the latest “Beige Book,” based on information collected from late

November through January 7. The Beige Book is a compilation of informal soundings of business conditions in the 12 Fed

districts, which are referenced by the name of their headquarters cities. “New home construction and existing home sales

were little changed, with several districts reporting that sales were limited by rising prices and low inventory. Commercial real

estate activity was also little changed on balance. All Districts noted that labor markets were tight and that firms were struggling

to find workers at any skill level. Minneapolis indicated that construction firms had turned down business because they could

not find workers.” AGC compiled all construction-related comments.

Data DIGest is a weekly summary of economic news. All rights reserved. Sign up at http://store.agc.org. Editor: Ken Simonson, Chief Economist, AGC, simonsonk@agc.org