The DataDIGest: July 27-30, 2004Real (net of inflation) gross domestic product grew at a 3% seasonally adjusted annual rate from the first quarter to the second, the Bureau of Economic Analysis (BEA) reported today. That equaled the full-year rate for 2003 (revised today from 3.1%) but was the slowest rate in five quarters and well below the first-quarter rate of 4.5% (revised from 3.9%). Real investment in nonresidential structures, which in these accounts includes mining and drilling structures, grew 5.2%, compared to a 7.6% decrease in the first quarter. This line also alternated increases and decreases in 2003, with a full-year decline from 2002 of 5.6% (revised from -4.6%). The strongest contributor to second-quarter growth was a 15% increase in residential investment.
“New construction starts increased 1% in June to a seasonally adjusted annual rate of $565 billion,” McGraw-Hill Construction reported Wednesday. For the first six months of 2004, total starts are up 10% from January-June 2003. “Nonbuilding construction (public works and electric utilities rebounded after a weak May [+22% for the month but -4% year-to-date], and offset the mild slippage registered in June by nonresidential building [-2% and -1%] and housing” (-2% and +20%). McGraw-Hill measures about 60% of total construction.
The Federal Reserve reported Wednesday in its Beige Book survey of current business conditions in the 12 Fed districts that “economic activity continued to expand in June and early July, although several districts reported that the rate of growth moderated. The Philadelphia, Atlanta, Chicago, St. Louis, Minneapolis, and Dallas Districts characterized growth rates as ranging from modest (Minneapolis) to solid (Chicago), while New York, Cleveland, Richmond, Kansas City, and San Francisco noted that growth rates slowed somewhat in their districts. Boston cited mixed reports from its business contacts.
Energy, steel, and cement prices were widely cited as high and were reported to have moved higher in most districts….Commercial construction continued to be weak throughout the country. St. Louis, an exception, said that commercial construction showed some improvement in most of its district. Commercial building in the Kansas City and Chicago Districts was characterized as flat, while activity in Minneapolis's district appeared mixed….The Cleveland, Atlanta, and Chicago Districts all reported material cost pressures in the construction sector. Atlanta reported that strong demand conditions had made it easier to pass on these higher costs, but Cleveland and Chicago reported that contacts had less success passing on cost increases in construction.
Cement shortages appear to be spreading. AGC has received 21 responses to a request sent late Wednesday for information on supply problems. Contractors reported shortages in Arizona, southern California, Florida, central Mississippi, Missouri, western Pennsylvania, upstate South Carolina, Texas (Houston area), and Utah. Montana, New Mexico, and western South Dakota, all of which have plants, reported no shortages.
“Leasing of warehouse and other industrial real-estate space rose modestly in the second quarter, according to five research firms,” the Wall Street Journal's “Property Report” stated Wednesday. “But the growth was limited mostly to a few key markets….What's more, the firms conclude, a large amount of construction slated to be added to the market in the next two quarters, coupled with signs of slowing economic growth, threatens to postpone a robust recovery in leasing. [Riverside-San Bernardino and Los Angeles County] posted the highest absorption [net change in the amount of occupied space]. Chicago and Dallas also posted strong gains. Meanwhile, absorption fell in Kansas City, while Atlanta, northern and central New Jersey, and Greenville, South Carolina, registered negative absorption, according to Grubb & Ellis.”
New-home sales remained torrid in June, falling just 0.8% from May, seasonally adjusted, and standing 11% higher than in June 2003, the government reported Tuesday. Sales for the first half of 2004 totaled 20% more than in the same period of 2003. The supply of unsold homes remained at the same low 3.4 times monthly sales as in May, suggesting that home building will continue at a rapid pace. The median sale price climbed to $210,000, 12% higher than a year ago. Homeownership is becoming more widespread and balanced demographically, the Census Bureau reported yesterday. In the second quarter, homeownership climbed to a record 69.3% of households, seasonally adjusted, from 68.7% in the first quarter. The largest gains were among under-35-year-olds and households with below-average (median) family income.
“Total compensation costs for civilian workers increased 0.9% from March to June, seasonally adjusted, moderating from the 1.1% gain from December to March,” the Bureau of Labor Statistics reported yesterday. Increases in wages and salaries held steady at 0.6%, while the rise in benefits costs slowed to a 1.8% gain from 2.4% in the prior quarter. In contrast, construction compensation slowed to a 0.5% gain from 0.9%, with wage increases dropping to 0.1% from 1%. (Benefits increases are not shown separately for compensation but apparently accelerated.)
Report Abusive Comment