Through September 2014, U.S. total private construction spending increased 3.38 percent from the year-earlier level. How did the various categories stack up in terms of their contribution to this year-over-year increase in total private construction spending? The multifamily and nonresidential categories together accounted for 4.34 percent of the change, and new single-family and residential improvements combined to shave 0.96 percent off the change (see the chart).
Does commercial construction activity in the Southeast mirror that of the nation? On a quarterly basis, the Atlanta Fed polls southeastern business contacts engaged in commercial construction to track and better understand regional trends in construction activity. The latest poll results appear to tell a story similar to the one that the national numbers depict.
Most respondents indicated that the pace of nonresidential construction activity and the pace of multifamily construction activity in the Southeast continued to be ahead of the year-earlier level (see the charts).
More than 80 percent of respondents reported a backlog that was similar to or greater than the year-earlier level, signaling that the pipeline of future activity remains fairly robust (see the chart).
The number of respondents reporting that the amount of available credit met or exceeded demand continued to increase from earlier reports. In the third quarter of 2014, 82 percent of contacts indicated that credit was sufficiently available, compared with 68 percent the previous quarter and 78 percent one year earlier (see the chart).
While half of respondents noted that they expect their headcount to remain the same from this quarter to the next, 44 percent of respondents indicated that they were planning to do a modest to significant amount of hiring in the fourth quarter of 2014 (see the chart).
Relative to the previous quarter, fewer contacts indicated that they were having a difficult time filling positions (see the chart).
Most contacts reported some degree of upward pressure on labor costs. When looking across the brackets of labor cost increases, most of the pressure seemed to be concentrated in the category indicating that labor costs are up from 3 to 4 percent versus a year ago. This response marks a shift from prior periods, when the pressure appeared concentrated in the bracket indicating that labor costs were up from 1 to 3 percent. Continuing a trend that we’ve noted over the past few quarters, a growing share of contacts (more than 80 percent) indicated that their labor costs had increased more than 3 percent from year-earlier level (see chart).
The next poll will open on January 5, 2015. If you are a commercial contractor and would like to participate in this poll, please let us know by sending a note to RealEstateCenter@atl.frb.org.
Note: Third quarter 2014 poll results were collected October 6–15, 2014, and are based on responses from 18 business contacts. Participants in this poll included general contractors, subcontractors, lenders, developers, and material fabricators with footprints of varying sizes across the Southeast.
By Jessica Dill, senior economic research analyst in the Atlanta Fed's research department