Capitol Update 6/9/2023

May brings 2% decline in Dodge Momentum Index

The Dodge Momentum Index reached 180.5 last month, down 2% compared with April, with the commercial component dropping 6.1%. However, the institutional component increased 5.6%, bolstered by laboratories for research and development and by hospital projects, although Dodge Construction Network expects higher interest rates to hinder overall index growth through year-end. Full Story: Dodge Data & Analytics

How the debt ceiling deal affects construction

Project permit rules are revised and Infrastructure Investment and Jobs Act funding is preserved in newly enacted debt ceiling legislation. However, the law includes constraints on Transportation Department highway infrastructure spending, and some observers are concerned by possible funding curbs for housing and urban development, though not necessarily because of the debt deal. Full Story: Engineering News-Record (tiered subscription model)   Smart Cities Dive  

Construction jobs up 25K in May

The construction industry added 25,000 jobs in May, according to the Bureau of Labor Statistics. Heavy and civil engineering construction led the way with 10,700 positions. Full Story: Engineering News-Record (tiered subscription model)  

April brings increase in construction spending

Seasonally adjusted construction spending rose 1.2% in April compared with March, reaching an annual rate of slightly over $1.9 trillion, according to the Census Bureau. The April amount is also up 7.2% compared with April 2022, bringing the total for the first four months of 2023 to $566.7 billion, up 6.1% compared with the same period a year earlier. Full Story: US Census Bureau  

Study: Construction of single-family rental homes surges

A RentCafe study shows construction of single-family rental homes jumped 47% year over year in 2022 and reached a record high. The total of 14,500-plus homes is more than twice the pre-pandemic pace of homebuilding, with growth spurred by pandemic-related lifestyle changes, as well as elevated interest rates and housing prices, the study shows. Full Story: Multifamily Dive

Rising costs put damper on hotel construction

A variety of factors bumping up hotel construction costs by 10% to 20% in most markets over the past year have caused industry growth projections to suffer. However, CBRE expects the situation to improve as interest rates top out at mid-year, with the Federal Reserve possibly reducing rates later. Full Story: Hospitality Net

Tighter lending standards slow hotel pipeline

Hotel projects are facing financing challenges, and the construction pipeline is slowing as regional banks tighten lending standards, according to Build Central data, as well as private equity firms, hotel developers and general contractors. “The regional banks that used to be active for us nine to 12 months ago are not showing up to finance hotels for us today,” said Joseph Delli Santi, chief investment officer of MCR Hotels. Full Story: Reuters 

32K infrastructure projects charted on website

A website launched by the White House lets the public track about 32,000 public infrastructure projects, as well as more than $470 billion in investment in matters such as clean energy, biotech and electric vehicles. “You can go down to every city, town, anywhere on the map and find out exactly how much we’ve invested so far, what the investment is for and how it’s going to affect your community,” President Joe Biden says. Full Story: Transport Topics  

Strong investment growth seen in contech

The construction technology field experienced a 30% increase in deals from 2020 to 2022, while investment jumped 85%, to $50 billion, despite slow adoption by construction firms, according to a McKinsey report. Stakeholders say in a survey they think contech growth is likely to continue, and McKinsey notes promising areas, including products of interest to multiple stakeholders. Full Story: Construction Dive  


Stalled West Coast Ports’ Labor Talks Threaten Global Supply Chains

The Washington Post reports that “labor strife has snarled operations at some of North America’s busiest ports, with dockworkers and port operators hung up on wages, and the Biden administration scrambling to contain work stoppages that could undercut global supply chains.” According to the Post, “Portions of the ports at Los Angeles, Long Beach, Oakland and Seattle – main gateways for Asian imports – have intermittently shuttered or slowed in recent days as the International Longshore and Warehouse Union and Pacific Maritime Association, which represents port operators, try to reach a deal.” The Post notes that President Biden “became personally involved in mediating a dispute among railway workers last year.”

Supreme Court Holds Employers Can Sue for Strike Damages

On June 1, 2023, in Glacier Northwest v. Teamsters, the United States Supreme Court ruled for the employer in a case with significant implications for the right of unions to strike and the right of employers to respond to strikes with court actions for damages. In Glacier, the Court addressed whether the National Labor Relations Act (“NLRA” or the “Act”) “preempts an employer’s state tort claim against a union for property damage that allegedly occurred because workers failed to take reasonable precautions to protect the employer’s property before going on strike.” The Court held that the NLRA does not preempt state law tort claims alleging intentional destruction of property, particularly where the union fails to take reasonable precautions to protect against foreseeable and imminent harm. Story

California’s Insurance Market Wobbles As Two Major Companies Pull Out Over Wildfire Risks And Construction Costs

Two insurance industry giants have pulled back from California’s home insurance marketplace, saying that increasing wildfire risk and soaring construction costs have prompted them to stop writing new policies in the nation’s most populous state. Story

CSLB’s Industry Expert Program Helps Licensees Share Their Knowledge The Contractors State License Board (CSLB)’s Industry Expert Program offers licensees a way to expand their trade knowledge and help fellow contractors while earning some extra money. CSLB utilizes trained members of the program to help investigate consumer complaints, including inspecting projects and rendering opinions on workmanship. They also may participate as a subject matter expert to help CSLB update its licensing exams. Ed Murray has been a contractor for over 30 years, licensed in the Solar Contractor (C-46) and General Building Contractor (B) classifications. “I’ve been pleased to provide industry expert services for the past 20 years and proud of the role I’ve played in helping CSLB resolve construction complaints and regulate the construction industry,” Murray said. CSLB compensates experts for their time and expenses.

To join the Industry Expert program, you must be:

·     A qualifier for at least five years on a current contractor license free of unresolved licensing and enforcement actions.

·     Knowledgeable about currently accepted trade standards in your area of expertise.

·     Effective at verbal communication.

·     Able to write an effective expert opinion.

·     Able to testify at arbitration or disciplinary hearings, as needed.

CSLB has more information about the Industry Expert Program on its website. To apply, please email your qualifications and preferred work location to:

Feds provide $570M-plus to improve rail crossing safety

The Federal Railroad Administration has provided over $570 million through the Railroad Crossing Elimination Grant Program to improve safety at more than 400 at-grade crossings in 32 states. Separately, Amtrak seeks $8 billion in federal grants to upgrade infrastructure such as bridges and tunnels on the Northeast corridor, as well as construction of a station in Arlington, Va. Full Story: Department of Transportation   Reuters

Light rail project under downtown L.A. is set to open

The $1.8 billion Metro Regional Connector rail project in Los Angeles is poised to open after two years of delays and obstacles that caused it to run $335 million over its budget of about $1.5 billion. Construction of the underground project, which extends 1.9 miles and adds three new stations, was complicated in part by the unexpected discovery of utility lines while digging under downtown Los Angeles. Full Story: Los Angeles Business Journal (free registration)  

Commentary: How proptech’s role is growing

A compound annual growth rate of 16.8% is forecast for property technology as the sector appears likely to transform the construction industry, writes Don Jensen of Allbridge. Jensen explores implications as property technology increasingly becomes a routine consideration when projects are designed and built. Full Story: For Construction Pros 

Experiment sheds light on how AI can benefit asphalt

Can artificial intelligence be applied in any useful way in the construction industry? An experiment with the popular ChatGPT reveals possibilities for asphalt contractors, as well as limitations. Full Story: For Construction Pros

US Trade Deficit Grew By $14B To $74.6B In March

Bloomberg reports that in April, the US trade deficit “widened…to the largest in six months as exports declined by the most since the start of the pandemic and imports picked up. The shortfall in goods and services trade grew by $14 billion, or 23% from a month earlier, to $74.6 billion, Commerce Department data showed Wednesday.” Reuters reports that the new data “led economists to expect that trade could chop off as much as 2.5 percentage points from gross domestic product this quarter, unless imports reversed course, a tall order given the persistent strength in domestic demand.” According to Reuters, “Economists expect the government to raise its GDP growth estimate for the January-March quarter to as high as a 2.3% annualized rate when it publishes its third estimate later this month.” Reuters adds, “The government’s second estimate of first-quarter GDP last month showed trade made no contribution to the economy’s 1.3% growth rate after adding to GDP for three straight quarters.”

Granite to widen section of Calif. Highway 1

Granite Construction will widen a section of California’s coast-skirting Highway 1 this summer under a $29 million contract. The work in Santa Cruz includes adding a pedestrian bridge, four retaining walls and a lane in each direction. Full Story: Construction Dive  

Audit finds flawed infrastructure vetting in San Diego

The San Diego Office of the City Auditor has suggested inadequate preliminary vetting of infrastructure projects exacerbates a five-year, $5.17 billion funding shortfall. An audit shows hasty vetting has led to poor cost estimates and inadequate funding in more than two-thirds of cases examined. Full Story: The San Diego Union-Tribune (tiered subscription model)