Steel framing industry association webinar nov 19, 2013
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Transcript of Steel framing industry association webinar nov 19, 2013
SFIA Webinar
November 19, 2013
Greenbuild 2010
2014 Economic Forecast:
Cold-Formed Steel and
Construction
Presented by: Bernard M. Markstein
Reed U.S. Chief Economist
2014 Economic Forecast
Greenbuild 2010
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Greenbuild 2010
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2014 Economic Forecast
The U.S. Economy
2014 Economic Forecast
7
Greenbuild 2010
Economy has been growing at a barely acceptable rate
Employment growing, but should be faster
Unemployment rate down, but not always for the right
reasons
Inflation moderate
Single-family housing recovering, but from a very low
level
Multifamily largely recovered, but still room to grow
Lending standards, although improving, remain
relatively tight
2014 Economic Forecast
8
Risks to the
Economy
2014 Economic Forecast
9
Greenbuild 2010
The federal budget/government shutdown
The federal debt ceiling
Europe
European government debt default
The euro
Energy (oil) prices
2014 Economic Forecast
10
Commercial construction
turned around in 2012
and is expected to
continue to improve
2014 Economic Forecast
11
Greenbuild 2010
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
02 03 04 05 06 07 08 09 10 11 12 13 14 15
Residential Nonresidential Building Heavy Construction
$ Billions
History Forecast
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
Construction Spending and
its Components
2014 Economic Forecast
12
Greenbuild 2010
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
35
40
453-Month Moving Average, Year-over-Year % Change
Reed Total Starts (3-Mo MA YoY)
Source: Reed Construction Data
2014 Economic Forecast
13
Greenbuild 2010
700
750
800
850
900
950
1,000
1,050
1,100
1,150
1,200
1,250
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Billion $, SAAR
Total Construction Spending
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
2014 Economic Forecast
14
Residential
construction is
recovering, but
from a low level
2014 Economic Forecast
15
Greenbuild 2010
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Thousands of Units, SAAR
Nation’s long-run (trend)
need for the next decade
Low Estimate
(1.4 million starts per year)
Nation’s long-run (trend)
need for the next decade
High Estimate
(1.8 million starts per year)
Total Housing Starts
Source: U.S. Census Bureau
2014 Economic Forecast
16
Greenbuild 2010
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2,250
2,500
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Thousands of Units, SAAR
Nation’s long-run (trend)
need for the next decade
Low Estimate
(1.4 million starts per year)
Nation’s long-run (trend)
need for the next decade
High Estimate
(1.8 million starts per year)
Total Housing Starts (3-Month Moving Average)
Source: U.S. Census Bureau
2014 Economic Forecast
17
Single-family housing
market is slowly
recovering
2014 Economic Forecast
18
Greenbuild 2010
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Thousands of Units, SAAR
Nation’s long-run (trend)
need for the next decade
High Estimate
(1.45 million starts per year)
Nation’s long-run (trend)
need for the next decade
Low Estimate
(1.1 million starts per year)
Single-Family Housing Starts
Source: U.S. Census Bureau
2014 Economic Forecast
19
Greenbuild 2010
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Thousands of Units, SAAR
Nation’s long-run (trend)
need for the next decade
Low Estimate
(1.1 million starts per year)
Nation’s long-run (trend)
need for the next decade
High Estimate
(1.45 million starts per year)
Single-Family Housing Starts (3-Month Moving Average)
Source: U.S. Census Bureau
2014 Economic Forecast
20
The multifamily
construction market is
near normal
2014 Economic Forecast
21
Greenbuild 2010
0
50
100
150
200
250
300
350
400
450
500
88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Thousands of Units, SAAR
Nation’s long-run (trend)
need for the next decade
High Estimate
(350,000 starts per year)
Nation’s long-run (trend)
need for the next decade
Low Estimate
(300,000 starts per year)
Multifamily Housing Starts
Source: U.S. Census Bureau
2014 Economic Forecast
22
Greenbuild 2010
0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13
Thousands of Units, SAAR
Nation’s long-run (trend)
need for the next decade
High Estimate
(350,000 starts per year)
Nation’s long-run (trend)
need for the next decade
Low Estimate
(300,000 starts per year)
Multifamily Housing Starts
Source: U.S. Census -Bureau
2014 Economic Forecast
23
Greenbuild 2010
0
50
100
150
200
250
300
350
400
450
500
00 01 02 03 04 05 06 07 08 09 10 11 12 13
Thousands of Units, SAAR
Nation’s long-run (trend)
need for the next decade
Low Estimate
(300,000 starts per year)
Nation’s long-run (trend)
need for the next decade
High Estimate
(350,000 starts per year)
Multifamily Housing Starts (3-Month Moving Average)
Source: U.S. Census Bureau
2014 Economic Forecast
24
The falling
homeownership
rate is a two
edged sword
2014 Economic Forecast
25
Greenbuild 2010
63
64
65
66
67
68
69
70
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
Homeownership Rate Percent
Lowest rate:
Q4 1985
63.6%
Peak rate:
Q2 2004
69.4%
65.1%
Source: U.S. Census Bureau
2014 Economic Forecast
26
Greenbuild 2010
30
31
32
33
34
35
36
37
80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12
Rental Rate Percent
Highest rate:
Q4 1985
36.4%
Lowest rate:
Q2 2004
30.6%
34.9%
Source: U.S. Census Bureau
2014 Economic Forecast
27
Greenbuild 2010
6.5
7.0
7.5
8.0
8.5
9.0
9.5
10.0
10.5
11.0
11.5
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
Rental Vacancy Rate (SA) Percent
Peak rate:
Q3 2009
10.9%
8.1%
Source: U.S. Census Bureau
Seasonal Adjustment: Moody’s Analytics
2014 Economic Forecast
28
Residential
construction
spending
2014 Economic Forecast
29
Greenbuild 2010
0
100
200
300
400
500
600
700
800
02 03 04 05 06 07 08 09 10 11 12 13 14 15
Improvements Single-family Multifamily
$ Billions
Residential Spending Components
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
History Forecast
2014 Economic Forecast
30
Greenbuild 2010
-60
-50
-40
-30
-20
-10
0
10
20
30
40
503-Month Moving Average, Year-over-Year % Change
Reed Residential Starts (3-Mo MA YoY)
Source: Reed Construction Data
2014 Economic Forecast
31
Greenbuild 2010
100
150
200
250
300
350
400
450
500
550
93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Billion $, SAAR
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
Construction Spending:
New Residential Construction
2014 Economic Forecast
32
Greenbuild 2010
0
50
100
150
200
250
300
350
400
450
Single-Family Multifamily Improvements
$ Billions
2002 to 2012 ’13 ’14 ’15
Residential Construction Spending
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
2014 Economic Forecast
33
Greenbuild 2010
0
50
100
150
200
250
300
350
400
450
Single-Family Multifamily Improvements
$ Billions
2006 to 2012 ’13 ’14 ’15
Residential Construction Spending
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
2014 Economic Forecast
34
Nonresidential building
construction has struggled,
but is expected to improve
over the remainder of this
year and strengthen further
in 2014 and 2015
2014 Economic Forecast
35
Greenbuild 2010
-40
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
20
25
30
353-Month Moving Average, Year-over-Year % Change
Reed Nonresidential Starts (3-Mo MA YoY)
Source: Reed Construction Data
2014 Economic Forecast
36
Greenbuild 2010
200
225
250
275
300
325
350
375
400
425
450
475
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Billion $, SAAR
Construction Spending:
Nonresidential Construction
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
2014 Economic Forecast
37
Greenbuild 2010
0
10
20
30
40
50
60
70
80
90
100
Hotel/Lodging Office Commercial
$ Billions
2006 to 2012 ’13 ’14 ’15
Nonresidential Construction Spending
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
2014 Economic Forecast
38
Greenbuild 2010
0
10
20
30
40
50
60
70
80
90
100
110
Religious Healthcare Education
$ Billions
2006 to 2012 ’13 ’14 ’15
Nonresidential Construction Spending
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
2014 Economic Forecast
39
Greenbuild 2010
0
10
20
30
40
50
60
70
Public safety Amusement and recreation Manufacturing
$ Billions
2006 to 2012 ’13 ’14 ’15
Nonresidential Construction Spending
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
2014 Economic Forecast
40
Heavy engineering
(non-building)
construction held
up best over the
last few years
2014 Economic Forecast
41
Despite considerable
challenges, the outlook
for heavy engineering
construction is fairly
positive
2014 Economic Forecast
42
Greenbuild 2010
Reed Heavy Engineering Starts (3-Mo MA YoY)
Source: Reed Construction Data
-60
-50
-40
-30
-20
-10
0
10
20
30
40
50
60
70
80
903-Month Moving Average, Year-over-Year % Change
2014 Economic Forecast
43
Greenbuild 2010
Construction Spending:
Heavy Engineering
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
150
175
200
225
250
275
300
325
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Billion $, SAAR
2014 Economic Forecast
44
Greenbuild 2010
0
10
20
30
40
50
60
70
80
90
100
110
120
Transportation Communication Power
$ Billions
2006 to 2012 ’13 ’14 ’15
Heavy Engineering Construction Spending
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
2014 Economic Forecast
45
Greenbuild 2010
0
10
20
30
40
50
60
70
80
90
100
Highway Water and Sewer Conservation
$ Billions
2006 to 2012 ’13 ’14 ’15
Heavy Engineering Construction Spending
Source: History – U.S. Census Bureau; Forecast – Reed Construction Data
2014 Economic Forecast
46
A look at regional
economic
performance
2014 Economic Forecast
47 Source: Philadelphia Federal Reserve Bank
2014 Economic Forecast
48 Source: Philadelphia Federal Reserve Bank
2014 Economic Forecast
49
Building Materials
Prices
2014 Economic Forecast
50
Greenbuild 2010
PPI: Construction (Unprocessed) Materials
-15
-10
-5
0
5
10
15
20
25
30
130
140
150
160
170
180
190
200
210
220
2301982 = 100, Not Seasonally Adjusted Y/Y %
PPI Index (LHS)
Y/Y % (RHS)
219.9
3.3%
Up 13% from
recession low
(December 2008)
Source: Bureau of Labor Statistics
2014 Economic Forecast
51
Greenbuild 2010
PPI: Materials and Components for
Construction (Processed Goods)
Source: Bureau of Labor Statistics
-8
-6
-4
-2
0
2
4
6
8
10
12
14
120
130
140
150
160
170
180
190
200
210
220
230
PPI Index (LHS)
Y/Y % (RHS)
Up 16% from
recession low
(December 2007)
2.0%
223.5
1982 = 100, Not Seasonally Adjusted Y/Y %
2014 Economic Forecast
52
Greenbuild 2010
IRON & STEEL SCRAP PRICES
Source: Bureau of Labor Statistics
-80
-60
-40
-20
0
20
40
60
80
100
120
140
160
0
100
200
300
400
500
600
700
800
900
Down 36%
from peak
(Jul 2008)
Up 119% from
recession low
(Nov 2008)
Y/Y % (RHS)
PPI Index (LHS)
-3.4%
513.6
1982 = 100, Not Seasonally Adjusted Y/Y %
2014 Economic Forecast
53
Greenbuild 2010
STEEL MILL PRODUCTS PRICES
Source: Bureau of Labor Statistics
-40
-30
-20
-10
0
10
20
30
40
50
60
50
75
100
125
150
175
200
225
250
275
300
Down 24%
from peak
(Aug 2008)
Up 27% from
recession low
(May 2009)
-4.4%
194.3
PPI Index (LHS)
Y/Y % (RHS)
1982 = 100, Not Seasonally Adjusted Y/Y %
2014 Economic Forecast
54
Greenbuild 2010
STEEL PIPE AND TUBE PRICES
Source: Bureau of Labor Statistics
-30
-20
-10
0
10
20
30
40
50
60
70
50
75
100
125
150
175
200
225
250
275
300
Down 13%
from peak
(Feb 2012)
Up 26% from
recession low
(Dec 2007)
-6.1%
253.7
PPI Index (LHS)
Y/Y % (RHS)
June 1982 = 100, Not Seasonally Adjusted Y/Y %
2014 Economic Forecast
55
Greenbuild 2010
INDUSTRIAL NATURAL GAS PRICES
Source: Bureau of Labor Statistics
-50
-25
0
25
50
75
100
125
150
50
75
100
125
150
175
200
225
250
275
300
325
350
Down 50%
from peak
(Jul 2008) Up 9%
from low
(May 2012)
3.7%
168.9
PPI Index (LHS)
Y/Y % (RHS)
December 1990= 100, Not Seasonally Adjusted Y/Y %
2014 Economic Forecast
56
Greenbuild 2010
PETROLEUM REFINERIES PRICES
Source: Bureau of Labor Statistics
-60
-40
-20
0
20
40
60
80
100
120
0
50
100
150
200
250
300
350
400
450
500
Down 16%
from peak
(Jul 2008)
Up 74% from
recession low
(Dec 2008)
Y/Y % (RHS)
PPI Index (LHS)
-8.3%
377.7
June 1985 = 100, Not Seasonally Adjusted Y/Y %
2014 Economic Forecast
57
Greenbuild 2010
Crude Oil (Brent) Spot Prices
Source: U.S. Energy Information Administration (EIA)
-60
-40
-20
0
20
40
60
80
100
120
140
160
180
0
20
40
60
80
100
120
140
160
Down 18%
from peak of
$132.72
(Jul 2008)
Up 173% from
recession low
of $39.95
(Jul 2008)
$ per Barrel, Not Seasonally Adjusted Y/Y %
$109.08
-2.4%
Down 13% from
recent peak of
$125.45
(Mar 2012)
2014 Economic Forecast
58
Greenbuild 2010
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web www.reedconstructiondata.com
2014 Economic Forecast
59
Greenbuild 2010
Contact Information and Links
Bernard M. Markstein
Office: 301-588-5190
Mobile: 404-952-3381
U.S. Forecast and Commentary: http://www.reedconstructiondata.com/market-
intelligence/articles/
Blog: http://www.reedconstructiondata.com/market-
intelligence/bernie-markstein/