Capitol Update 12/5/22
A major rail strike would be averted with two resolutions that have cleared the House and are headed the Senate. Four holdout unions would be forced to accept a previously agreed but rejected contract under one resolution, and a second resolution adds seven paid sick days, the absence of which had been a point of contention. Full Story: Supply Chain Dive
Contractors are facing a diesel price squeeze with a more than 400% jump since last year, according to a report by construction consultant Linesight. A separate report by Levelset cites the war in Ukraine, refinery shutdowns during the pandemic and Hurricane Ida as factors narrowing the national diesel supply margin to 25 days amid rising project costs, claims and defaults. Full Story: Construction Dive
Construction companies’ eagerness to hire outpaced actual hiring in October, according to an Associated General Contractors of America analysis of government data. Hiring increased from the September level across 27 states, but a “shortfall in available workers is undermining job gains and causing delays and higher costs for many projects,” AGC Chief Economist Ken Simonson says. Full Story: Builder
Third conspirator pleads guilty in Caltrans bid-rigging scheme
A contractor pleaded guilty for his role in a four-year bid-rigging and bribery scheme that targeted contract awards from the California DOT, the Department of Justice announced. Bill R. Miller, owner of Sanger, California-based BRM Construction, bribed a Caltrans official with more than $800,000 in cash, goods and services and gamed the agency’s bidding process from 2015 to 2019 to steer awards to his company or those of his co-conspirators, the Justice Department said. Miller admitted to the charges in a plea agreement. Miller schemed with his former business partner, William D. Opp, and bribed former Caltrans contract manager Choon Foo “Keith” Yong to stack bids in their favor. Both Opp and Yong previously pleaded guilty to their involvement in the ruse.
The 11% growth in equipment rental revenue this year is expected to ease to 3.4% next year, according to the latest forecast by the American Rental Association. Single-digit gains are expected in the following years as well, as “we see a definite softening in rental revenue growth but we do not see negative growth,” says John McClelland, ARA chief economist. Full Story: Underground Construction
Capital spending, including construction, across the states climbed 15.3% this year and is likely to continue growing, predicts an annual report from the National Association of State Budget Officers. The 2022 gain to $149.2 billion is the biggest since 1994, the report says, and this and further increases are attributed in large part to recent federal funding. Full Story: Engineering News-Record (tiered subscription model)
There’s little evidence that provisions in the bipartisan infrastructure law to speed federal project reviews are taking effect, officials argued at hearing of the Environment and Public Works Committee, which is monitoring the law’s rollout. Sen. Shelley Moore Capito, R-W.Va., said some benefits from the law are beginning to surface, but the Transportation Department has dragged its feet on implementing a key project streamlining provision known as One Federal Decision. Full Story: Engineering News-Record (tiered subscription model)
The Architecture Billings Index reached 47.7 in October, registering the first decline since January 2021. New project inquiries stayed positive at 52.3, though new design contracts eased, with a reading of 48.6. Full Story: Construction Dive
Every construction category but residential saw employment gains in November, with total jobs growth of 20,000 for the month, according to the Bureau of Labor Statistics. Nonresidential added 8,200 jobs, while heavy and civil engineering construction added 5,300, but residential jobs were down 2,600 overall, though residential specialty trade contractors posted an increase of 6,500. Full Story: Engineering News-Record (tiered subscription model)
Total US construction spending eased 0.3% month to month in October but was up 9.2% from a year before, according to the US Census Bureau. The October figure indicated a seasonally adjusted annual rate of about $1.79 trillion in October, with spending for the first 10 months of the year totaling nearly $1.51 trillion, up 10.8% from a year earlier. Full Story: The Construction Broadsheet
A 26% surge in nonbuilding starts powered a seasonally adjusted 8% gain in total construction starts last month for an annual rate of $1.12 trillion, according to Dodge Construction Network. Nonresidential building advanced 9% while residential eased 3% for the month, with the overall figure for the year through October up 16% from the year-earlier period. Full Story: Dodge Data & Analytics
Commercial construction starts are likely to plunge 13% in the new year, adjusted for inflation, with overall starts declining 3%, the 2023 Dodge Construction Outlook predicts. The biggest declines are expected in the warehouse and office sectors as economic activity slows, while public funding will buoy manufacturing and infrastructure. Full Story: Construction Dive
Paying prevailing wage rates and a commitment to hire construction apprentices in registered programs are among the labor requirements the Biden administration has outlined for companies seeking work on newly funded clean energy projects. The requirements, which Associated General Contractors of America spokesperson Brian Turmail called “woefully short on details and specifics” on first glance, are linked to $270 billion worth of enhanced tax breaks under climate provisions in the Inflation Reduction Act. Full Story: Engineering News-Record (tiered subscription model)
A $2.8 billion office building project planned in Lone Tree, Colo., leads a list of the top 10 private office projects in the US. A $5.6 billion Destination Medical Center project in Rochester, Minn., heads a similar list for government office building construction. Full Story: Daily Commercial News (Ontario)
U.S. adds 263,000 jobs in November, complicating the fight against inflation
The U.S. economy added 263,000 jobs in November, bolstering a labor market that has proved surprisingly resilient, while complicating the Federal Reserve’s top task of tackling inflation, which remains the nation’s biggest economic threat.
The upbeat reading from the Bureau of Labor Statistics, released Friday, was down slightly from October but still well over historic norms and analysts expectations. The unemployment rate remained unchanged at 3.7 percent.
Economists say they are encouraged by the labor market’s durability, but they worry that continued momentum — and rising wages, in particular — will force the Fed to more aggressively raise interest rates in its quest to slow the economy for longer, increasing the risk of a recession.
Payroll employment increases by 263,000 in November; unemployment rate unchanged at 3.7%
Total nonfarm payroll employment increased by 263,000 in November, and the unemployment rate was unchanged at 3.7 percent. Notable job gains occurred in leisure and hospitality, health care, and government. Employment declined in retail trade and in transportation and warehousing.
Project delays and higher costs might occur in the short term because of Buy America rules for infrastructure projects, according to state and local transportation agencies. “[C]ontractors are forced to shift material purchases to domestic suppliers, who in turn may struggle with availability due to limited quantities and high demand,” according to a letter to Transportation Deputy Secretary Polly Trottenberg from Roger Millar, Washington state’s transportation secretary and president of the American Association of State Highway and Transportation Officials. Full Story: Route Fifty
The pandemic has hit Northern California construction hard, but categories such as affordable housing, higher education and data centers are holding up well, says Alex Barake, head of development for Suffolk Construction’s San Francisco team. In an interview, Barake reviews some of his company’s projects in these areas and how Suffolk is dealing with challenges, including inflation and labor shortages. Full Story: Construction Dive
Shovels hit the dirt Friday on a Los Angeles Metro rail line that will run along Van Nuys Boulevard and link stations across the San Fernando Valley. Initial work entails utility relocations along a 6.7-mile route that will eventually add 11 new stations at a total cost of about $2 billion. Full Story: Streetsblog
Santa Clara County, Calif., is advancing plans for a Bay Area Rapid Transit tunnel to downtown San Jose with the acquisition of a $460 million tunnel boring machine. The planned tunnel will extend nearly 5 miles at a width of 52 feet, making it one of the world’s largest of its kind. Full Story: San Jose Mercury News (Calif.) (tiered subscription model)
The level in San Diego’s Lake Hodges will be lowered about 2 feet with the release of water after recent rains as crews continue to work on dam repairs over the next few months. Cracks were recently discovered in the dam, and it’s hoped that the work will avoid the need to empty the reservoir. Full Story: The San Diego Union-Tribune (tiered subscription model)
Oakland, Calif., plans to use about $259 million in state funding to begin work on a proposed development at the city’s Howard Terminal, anticipating a possible move by the Oakland A’s to the harbor area. The proposed development is initially valued at around $12 billion and is seen as a benefit to West Oakland even if the A’s ultimately decide on a different course. Full Story: San Jose Mercury News (Calif.) (tiered subscription model)