Capitol Update 5/16/2022
The Producer Price Index for final demand increased 0.5 percent in April. Prices for final demand goods advanced 1.3 percent, and the index for final demand services was unchanged. Final demand prices moved up 11.0 percent for the 12 months ended in April.
In April, the Consumer Price Index for All Urban Consumers rose 0.3 percent, seasonally adjusted, and rose 8.3 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.6 percent in April (SA); up 6.2 percent over the year (NSA).
Compensation costs increased 1.4 percent for civilian workers, seasonally adjusted, from December 2021 to March 2022. Over the year, total compensation rose 4.5 percent, wages and salaries rose 4.7 percent, and benefit costs rose 4.1 percent.
‘Risk of further outages’: California warns of blackouts as another hot summer looms
Officials said California has made considerable progress in shoring up the grid, including the addition of nearly 4,000 megawatts of battery storage in just over two years. But climate change is creating ever-worsening heat waves, and supplies are tightening all over the West, making it harder for the state to import electricity in a pinch. Wildfires can knock transmission lines out of commission. Dale Kasler in the Sacramento Bee
AECOM earnings rise, shares fall on maintained guidance
Top 10 contractor AECOM posted increased earnings of $41.6 million, or 29 cents per share, on $3.21 billion in revenue for its second fiscal quarter of 2022, the company said Monday. Those profits were 5.6% higher than the $39.4 million it earned a year ago, but revenue was down 1.6% from $3.27 billion. The numbers underperformed the expectations of Wall Street analysts, however, who were looking for profits of $0.37 per share on revenue of $3.39 billion for the three-month period ended March 31, according to stock analysis site Seeking Alpha. In a bright spot, total backlog — the amount of jobs won but not started — increased 4% to $40.8 billion, compared to $39.4 billion a year earlier. AECOM executives said they faced higher worker absenteeism during COVID-19’s omicron surge in the first three months of 2022, had to manage COVID-related shutdowns in China and wrote off $69 million when they immediately exited Russia after Vladimir Putin invaded Ukraine in February. The firm nevertheless reaffirmed its full-year earnings guidance of $3.30 to $3.50 per share.
Fluor posted net income from continuing operations of $48 million on $3.1 billion in revenue for the first quarter. Meanwhile, Skanska reported operating income of $190 million for the quarter, and Tutor Perini posted a loss from construction operations of $9.9 million.
Takeaways: Despite the mixed results among major contractors, many publicly traded construction companies we’ve been tracking at SmartBrief appear to either have a robust backlog or are poised to attain one. It appears companies in the federal contracting space are remaining aggressive, as evidenced by Tutor’s recent award in Guam (see today’s lead story) and the fact that Fluor’s Mission Solutions unit was largely buoyed this quarter by the closeout of an Army Corps of Engineers project in Puerto Rico. — Evan Milberg, senior editor at SmartBrief
Speedier permitting without sacrificing attention to environmental factors is the goal of a new action plan for infrastructure released by the White House. The plan calls for agencies to coordinate their efforts early in the permitting process, but critics say the plan could lead to cutting corners and less thorough reviews. Full Story: The Hill The White House
The ongoing worker shortage in construction is affecting nonunion firms more than those with unions, according to a review of surveys by Associated General Contractors of America from 2018 to 2021. The disproportionate shortage began before the pandemic, with nonunion firms 16% more likely to have difficulty filling positions and 13% more likely to lose qualified workers to other industries, according to AGC. Full Story: Contractor Magazine
A long list of factors, including the war in Ukraine and the pandemic, could bring a slowdown in US construction after a good first quarter, according to five economists, including the Associated General Contractors of America’s Ken Simonson, participating in an online presentation. Although recession is possible, AIA chief economist Kermit Baker pointed to other factors that could sustain a good pace of growth, including job gains, corporate profits, consumer spending and business investment. Full Story: Daily Commercial News (Ontario)
Improvements for existing transportation infrastructure across the US are the focus for $1.5 billion in funding requested by the Biden administration under the Rebuilding American Infrastructure with Sustainability and Equity program, says Transportation Secretary Pete Buttigieg. The fiscal 2023 funding would help state agencies and serve to ease snarls in the movement of goods along the supply chain, Buttigieg said during a recent House subcommittee hearing. Full Story: Transport Topics
The Labor Department’s Office of Federal Contract Compliance Programs plans to roll out an online portal this summer that will gather subcontracts and dates from construction companies as part of an effort to retool the audit selection process. Full Story: Bloomberg Law
Demolition of temporary structures is underway at the site of a new hospital tower at the University of California at Davis Medical Center. The $3.75 billion California Tower is designed to meet seismic standards set to take effect in 2030. Full Story: The Sacramento Bee (Calif.) (tiered subscription model)
Kiewit Shea Traylor has received a $235 million contract to design and prepare for construction of a Bay Area Rapid Transit extension in San Jose, Calif. The Valley Transportation Authority board, which awarded the contract, is concurrently beginning an independent review of the single-bore tunnel plan for the 6-mile project. Full Story: The Real Deal/San Francisco
California’s Santa Clara Valley Transportation Authority has awarded Balfour Beatty a $16 million contract for renovation, modification and replacement of the overhead contact system along the Guadalupe light-rail corridor. The work will include replacing 38 miles of contact wire and an array of other components as well as introducing safety improvements at a maintenance facility. Full Story: The Construction Index (UK)
It will take about a decade, but California’s Port of Long Beach plans to update its rail capacity so that more cargo can be moved out of the port by trains rather than trucks. The planned $1.5 billion Pier B On-Dock Rail Support Facility has won final environmental approval, and federal funding is the next step. Full Story: Courthouse News Service)