Vermeulens has released its market outlook report for the second quarter of 2021. Key points include:
- Construction Prices: National non‐residential prices remained flat through Q2 of 2021.
- Short-term Spikes: Supply chain issues, backlog growth, and labor shortages in busy markets have created short‐term spikes in pricing. We recommend a bidding contingency in the order of 5% for these markets.
- Forecast: Inflation, moving forward, is projected to be 0.5% per month, assuming a reopening of the economy post‐pandemic and continued monetary and fiscal support.
- Fed Watch: The Federal Reserve continued monetary stimulus in line with the “new normal.”
- Architectural Billings: Q2 has continued growth in both inquiries and billings. The increase in the second quarter billings is close to a record high in May of 58.5 on the American Institute of Architects’ Architecture Billings Index. Billings are showing growth in all regions.
- Construction Dollar Volume: Residential construction continues to boom, reaching new highs in Q2; non‐residential construction is down year over year 4.5%, while infrastructure is also down by 5.4% year over year.
- Construction Job Growth: Approximately 38,000 construction jobs were lost in Q2, or ‐0.5%; construction employment is still down 3.1% since pre‐pandemic. June growth has tapered off parallel with the resurgence of the pandemic.
- New York Stock Exchange: The stock market grew by 5.6% in Q2 and has completely recovered reaching new highs in Q2; overall the NYSE is up 81% from the March 2020 downward spike.
- Growth in Employment: Monthly average job growth through Q2 was 0.57 million as the economic recovery begins to accelerate. The resurgence of the pandemic and concerns about students returning to school will affect back to work plans for parents.
- Gross Domestic Product: Initial GDP projections point to an annualized growth rate of 9% for Q2 2021.
- Commodities: COVID‐19 projections, a declining USD, and rapid residential construction growth have created short-term price spikes. Steel continues to climb for non-standard shapes.
- Personal Consumption Expenditures: PCE, the key consumer inflation indicator for the Federal Reserve, is up 4% year over year (June 21/ June 20).
The complete Market Outlook Q2-2021 report is available from Vermeulens.