Construction, along with housing turnover (i.e., existing home sales) remain the principal drivers of architectural coatings demand. After bottoming out in 2009-10, those indicators have consistently risen in the ensuring decade and have resulted in slow, but consistent growth in architectural coatings volume.
As shown in Figure 1, although private residential construction has declined somewhat over the past year, private nonresidential construction has generally remained on an upwards trajectory. Housing starts, a closely watched figure, have been fairly flat over the past several years.
Another measure of market demand for housing (in particular, single family housing) is the National Association of Home Builders (NAHB) monthly Housing Market Index (HMI), which measures builder sentiment regarding the demand for single-family housing market in the U.S.1 This index, shown in Figure 2, is consistent with overall construction trends shown in Figure 1. While the overall index for August was 66, there were some significant regional variations, ranging from 57 in the northeast to 75 in the west, with the Midwest at 59 and the South at 69. NAHB respondents also reported that labor and subcontractor shortages remained widespread and are continuing to affect the industry in a number of ways. In July, the HMI survey asked builders specifically about shortages in 16 different occupations, including painters. Respondents indicated shortages of labor, with 83 percent reporting shortages for framing crews, and 61% reporting shortages of painters (11% reported “serious shortage” of painters.)2
This is consistent with government data, where the Bureau of Labor Statistics has reported that there were 347,000 job openings in construction at the end of June (not seasonally adjusted), an increase of 24,000 (7%) from June 2018, and the highest total for June since the series began in December 2000.3
Contact ACA’s Allen Irish for more information.
1 According to the NAHB, the HMI survey asks builders to rate sales and sales expectations as “good,” “fair” or “poor.” Builders also rate traffic of prospective buyers as “high to very high,” “average” or “low to very low”. NAHB indicates that component indexes are calculated by first seasonally adjusting the percentage of responses in the Good/High and Poor/Low categories. Then a calculation is applied to these three components to produce an index on a scale ranging from 0 to 100, which are then incorporated into an overall HMI figure.
2 NAHB/Well Fargo Housing Market Index (HMI).
3 Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS), August 2019 release.
The post Construction Activity Maintains Slow Growth in 2019 appeared first on American Coatings Association.
from American Coatings Association https://www.paint.org/construction-8-19/
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