Editorial
 
 

Yes, the economy is steadily improving, and it’s smooth sailing for our future.  All the signs are
there, and this time it’s not just more wishful thinking.  We get regular monthly reports from the 
Associated General Contractors (AGC) of America, and they are reporting an increase in 
construction spending.  In fact, AGC says that in July, construction spending reached the highest 
level since 2008.  These are the best, most robust figures that they’ve seen in the last seven years.
Architects and contractors are both reporting a backlog of work.
	
“Private nonresidential construction should remain strong through the rest of 2014 and beyond, 
while residential spending is likely to keep growing, though at a more moderate pace,” said Ken Simonson, the association's chief economist. 
	
It’s not just that construction spending numbers are up; construction employment figures have been steadily climbing as well.  AGC notes that construction industry employment hit a five-year high in August, and construction unemployment declined to 7.7%.  An AGC survey found that one in four firms say they have already turned down projects because of labor shortages.
	
“Construction employment growth has been accelerating and is broad-based,” said Simonson.  “The increase in the past 12 months was the largest since 2006 and was spread among residential, nonresidential building, and heavy construction.”
	
Wall Street shows us that the housing market is on the mend.  Strong home building data has propelled housing related stocks higher.  KB Homes and DR Horton stocks are both up over last year.  The same holds true for the home improvement sector; Home Depot and Lowe’s stocks are up.
	
Prices don’t climb when there’s no market.  Many construction industry manufacturers have been holding the line on material prices and taking the loss.  They’re like you, cutting overhead, keeping prices down, and just trying to keep the doors open until the economy improves.
	
Now that the construction industry has improved, you’ll see prices start to climb to where they should have been.  You may not like higher material prices, but it’s a sure sign that the economy is getting better.  Many manufacturers are also expanding their plant size or adding additional operations in the West; another sign that the market is improving.
	
More and more firms are reinvesting in their companies, and making purchases that they had been holding off on due to the economy.  The Equipment Leasing and Finance Association released their Monthly Leasing and Finance Index for July, showing new business volume was up 8% over last year.  The Index showed overall new business volume for July was $7.8 billion, up 8% from new business volume in July 2013.
	
“After a solid second quarter that saw an overall increase in U.S. gross domestic product and strong business investment, new business volume in the equipment finance sector continued to hold steady in July,” noted the association’s president and CEO, William G. Sutton.
	
The comments we’re hearing, from design firms and contractors, are positive.  Construction industry manufacturers see their sales increasing and are optimistic about the future.  The construction economy in the West has gotten a foothold and is now climbing.

Marcus Dodson
editor & publisher
Smooth Sailing
Looks Like the Economy is Over the 
Hump and It’s All Downhill from Here