Klein Tools announces scholarship commitment
Klein Tools recently announced a five-year $250,000 tool scholarship commitment at the 2007 NJATC National Training Institute week in Knoxville, TN. During NTI’s graduation ceremony, Klein awarded its first-year commitment of $50,000 to ten local IBEW-NECA training programs.

Klein Tool’s tool scholarship program was awarded to the training programs in two parts. Each training program is welcome to use the scholarship materials as they see fit.

The first part of the scholarship program consists of 25 Klein 14-piece apprentice tool sets awarded to each of five winning training programs. These tool sets are intended for distribution to individual apprentices based on criteria determined at the local program level. The second component of the scholarship program consists of a $5,000 endowment for each of five training programs to purchase needed Klein tools for use in their classrooms or training labs.

“Klein Tools views this scholarship program as an important opportunity to invest in the future. By helping to educate tomorrow’s trade professionals, Klein Tools gives back to the industry,” said Steve Ratkovich, training manager, Klein Tools.

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Economic Census forms coming in the mail
In December, more than 4 million American businesses, including 130,000 construction businesses, will receive 2007 Economic Census forms from the U.S. Bureau of the Census. Responses to the questionnaire are required by law (Title 13, U.S. Code), and are to be returned by February 12, 2008.

Every five years, the Economic Census develops a comprehensive portrait of American business, from the national to the local level. Timely and accurate data are vital to effective public policy and important to your publication and your readers.

The Census Bureau has created a special Web page at www.business.census.gov that details the Economic Census and provides statistics they can use to assess and grow their business operations.

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Nonresidential construction job growth offsets housing slump
Engineering employment gains point to further strength, AGC economist asserts

Nonresidential construction employment grew again in October, belying the notion that the housing slump is dragging down all construction," Ken Simonson, Chief Economist for The Associated General Contractors of America (AGC), said November 2, 2007. Simonson was commenting on the November 2 payroll employment report from the Bureau of Labor Statistics (BLS). "An acceleration of hiring by architects and engineers suggests even better news ahead.

"Although total construction employment fell by 5,000 in October, seasonally adjusted, and 106,000 or 1.4 percent compared to October 2006, all of those losses occurred in homebuilding," Simonson observed. "The BLS numbers show that over the past 12 months, employment in the three nonresidential categories--nonresidential building, specialty trades, plus heavy and civil engineering--climbed 42,000 or 1 percent," Simonson commented. "At the same time, employment in residential building and specialty trades dropped by 148,000 jobs or 4.4 percent.

"But that estimate greatly understates the actual difference," Simonson asserted. "Census Bureau figures for September show residential construction spending was down 16 percent from a year before and nonresidential was up almost 17 percent. It's likely that residential employment is actually down roughly 16 percent. That means about 400,000 'residential' specialty trade contractors are now doing nonresidential electrical, plumbing and other work.

"If these 400,000 workers are added to the nonresidential total, nonresidential would be up more than 10 percent to its payrolls, outpacing nearly every other industry," Simonson noted. "That's much closer to the 17 percent gain in nonresidential construction spending.

"The BLS report shows there is more growth ahead. Architectural and engineering employment rose 3.7 percent in the past 12 months, triple the growth in overall nonfarm employment," Simonson pointed out. "Their output will turn into construction jobs in the next several months, especially for energy, power and hospital projects."

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Construction spending climbs in September
Construction spending during September 2007 was estimated at a seasonally adjusted annual rate of $1.2 trillion, 0.3 percent (±1.8 percent) above the revised August estimate, according to the Commerce Department. The September figure is 0.8 percent (±2.2 percent) below the September 2006 estimate.

During the first nine months of 2007, construction spending amounted to $872.2 billion, 3.2 percent (±1.4 percent) below the $901 billion for the same period in 2006.

Spending on private construction was at a seasonally adjusted annual rate of $869 billion, 0.2 percent (±1.1 percent) below the revised August estimate of $871 billion. Nonresidential
construction was at a seasonally adjusted annual rate of $357.7 billion in September, 1.5 percent (±1.1 percent) above the revised August estimate of $352.4 billion.

In September, the estimated seasonally adjusted annual rate of public construction spending was $293.8 billion, 1.9 percent (±2.7 percent) above the revised August estimate of $288.2 billion. Highway construction was at a seasonally adjusted annual rate of $76 billion, 0.3 percent (±6.6 percent) above the revised August estimate of $75.8 billion.

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'Nothing scary' in today’s nonresidential construction numbers, AGC says

Investment in structures is still treating economy well

“Nonresidential construction provided a real treat to the economy in the third quarter," Ken Simonson, Chief Economist for The Associated General Contractors of America (AGC), said today. Simonson was commenting on the October 31 reports on gross domestic product and construction spending from the Commerce Department.

"Net of inflation, or real, investment in private nonresidential structures jumped 12 percent in the third quarter, the eighth straight quarter this investment category has outpaced gross domestic product growth," Simonson remarked. "You have to go back to the mid-1950s to find another period when private nonresidential construction was so persistently robust.

"The Census Bureau's construction spending report was even sweeter," Simonson commented. "Private and public nonresidential construction climbed 1.8 percent for the month of September and 17 percent over the past 12 months. That was enough to overcome the 1.4 percent fall in residential spending for the month and nearly offset the 16 percent residential drop from 12 months ago.

"There was nothing scary in the nonresidential categories, even for credit-sensitive commercial types," Simonson observed. "All 16 Census categories were up for the month, and all but religious structures were higher on both a September-over-September and a year-to-date basis.

"Over the next several months, I expect investment to slow in income-producing properties such as office, hotel and retail structures," Simonson stated. "But accelerating investment in energy and power projects, plus continued strength in hospital and educational construction, should keep the nonresidential totals up.

"My biggest concern is higher costs," Simonson concluded. "Diesel prices, which affect contractors thorough use of offroad equipment, construction trucks and fuel surcharges on delivery of materials, are 25 percent higher than a year ago and seem poised to rise further. Other materials, especially imports, are likely to accelerate as well. And construction wage rates are going up faster than for the economy as a whole. But public agencies, from transportation departments to county councils, have failed to budget enough for construction cost escalation, and instead are trimming projects."

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Construction materials costs to remain strong
The Associated Builders and Contractors (ABC) recently released this report about construction material inflation. Upward price pressure continues across many key commodities.

A sharp rise in energy and food prices pushed the Producer Price Index (PPI) up 1.1 percent during September, according to a report issued today by the US Department of Labor. Energy prices rose 4.1 percent last month – the largest increase since November 2006, when they went up 5.4 percent.

The September PPI for construction inputs, which includes materials such as cement, lumber and steel, rose 0.2 percent after declining 0.8 percent during August. During the third quarter, from July through September, the construction inputs PPI fell by 0.1 percent.

The core crude goods (raw materials not including food and energy products) PPI increased 1.6 percent during September after rising 1.3 percent during August. After no change during the second quarter, from April through June, prices jumped more 12 percent during the third quarter.

The PPI for materials and components for construction declined 0.2 percent during September following a 0.1 percent fall in August. During the past year, construction materials and components PPI have seen a slight increase of 1.2 percent. Specific materials posting lower prices include nonferrous wire and cable, asphalt felts and coatings, steel mill products, softwood lumber, plastic construction products and gypsum products. In contrast, switchgear and switchboard equipment, concrete products, and air conditioning and refrigeration equipment all saw gains.

What This Means
During the past year, prices for core crude goods have increased at a 22 percent annualized rate. According to Associated Builders and Contractors (ABC), these price escalations are likely to result in higher construction materials costs over the coming months.

ABC expects the demand for raw material prices to continue to rise due to the strong demand by global economies such as China, India and Brazil. ABC members should expect to experience larger material cost increases during the next 12 months than experienced during the previous year.

While today's overall PPI report was higher than expected, consumer prices in general remain in check. This could keep the Federal Open Market Committee, the monetary policy arm of the Federal Reserve, from reducing the Federal Funds Rate during its October meeting.

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