Does the Current Building Activity Equate to a Come Back?

Tuesday, June 11, 2013

contractor image2It seems like everywhere you turn there is a building project going on or building material truck's crowding the highways. Some might think this is nothing more than an illusion but, building statistics show that home building is on the rise along with home prices.

I believe the increased activity is driven by a couple of things, first there is the rebuilding of the east coast which has been devastated by Hurricane Sandy. Then there is the remains of Oklahoma and other midwestern towns which have been leveled by a rash of Spring tornado's. Add in a depleting inventory of existing homes and you have a rebounding building market, one which has driven up lumber prices steadily over the past several weeks. Another indicator would be labor and from the numbers exhibited here it does not look as if the building process is in full tilt, as of May those in the trades had a unemployment rate of 10.8%.

So, what we have here is a mixed bag of indicators, labor has yet to experience the rush of adding staff while the building materials segment is running up prices on everything. With the addition of business enhancing software most builders are doing more with less field management personnel however, you can only get so much production from trade labor and this is where I see the influx of workers added. Building by segment has not altered the landscape of the rebound, commercial, industrial, custom home and spec housing have all shown an increase. Retail would be the lagging segment due to the over abundance of stores which sit empty on city streets and strip malls around the country.

I would like to see a resurgence in the smaller more attentive Mom & Pop shops, they add character to our neighborhoods and in most cases carry products which are made closer to home then the Mega stores. Our economy counts on a sturdy work force which adds millions of dollars to the tax base and construction is the cornerstone to a robust economy. My conclusion is the ground work is laid, the industry is poised, we now need responsible lenders to step in and keep the rebound on track.

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Constructions has an important role in the economic sector .Hence Building activity indicators are an important sign of the strength or weakness of the broader economy.

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