Construction loadings grew 0.2% in May
July 16, 2012
Movements of construction goods continue to come in right on our expectations. Loadings for May were at 9.258 million, up 0.4% from the prior month after a 1.0% gain in April. The year-over-year growth slowed noticeably but still remains more robust than other sectors, up 3.3% in May. Aside from a two month stall out in late 2011, this is the weakest year-over-year growth since mid-2010. We expect growth to improve modestly and finish the year above 5%.
Our outlook for construction goods is essentially unchanged this month. Housing continues to show halting gains and the infrastructure components remain stable. After a period of stability during the middle of 2011, growth has resumed since the end of the year. Aside from a quick 2-month period of no growth, year-over-year growth has been very strong since turning positive in the middle of 2010. October and November of 2011 showed an anomaly of negative growth as we had both strong growth in those months during 2010 and weak months during 2011. Despite the relatively weak outlook for so many construction sectors (housing, infrastructure, etc.), it is coming off of such a historic low that the growth looks quite positive.
Improvements in housing conditions remains spotty, but the upward trend is clearly noticeable. The improvement is not nearly enough to make a significant dent in the deep hole that it has been in.
Loadings dropped throughout 2008 and 2009 and didn’t hit bottom until 2009Q4. It rebounded strongly starting in Q2 of 2010. Loadings fell 4.4% in 2007, 8.4% in 2008 and 19.6% in 2009. The decline in 2009 was shocking because this sector had already been through 2 years of significant declines. On an annual basis 2010 loadings were only up 1.1%, but 2011 saw a gain of 5.5%. Volumes have been trending higher since November 2011.
We expect growth to remain on track in 2012 with annual growth of 6%. The current growth is strong but volumes will remain well below the last peak. We look for growth to remain near 5% in 2013 and 2014, growing 4.7% and 5.4%, respectively.
Construction Goods are movements of products generally used in residential, business or infrastructure construction. This includes such items as lumber/wood, structural components, furniture, roofing, and gypsum. FTR’s data is seasonally adjusted and measures both short and long-haul OTR segments.
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