2. Moderator Wendy McBay Senior Director, Marketing CMD  18 years construction industry marketing  Six Sigma Green Belt certification  MBA, Auburn University 2 #CMDInfo

3. @AGCofA@AIANational@CMD_GroupLLC

4. Before we begin..… Technical issues – Try F5 on your keyboard – Submit a question Q&A session – To ask a question, enter your text in the ASK A QUESTION box and click ASK – Speakers will answer as many questions as they can in the allotted time Enlarge slides – Click ENLARGE SLIDES to view an expanded presentation screen Presentations – Click the DOWNLOAD SLIDES button to download the PDF Certificates – At the conclusion of today’s webcast, click the AIA/CES Certificate widget at the bottom of the screen to print your certificate 4 #CMDInfo

5. CMD is a registered provider with the American Institute of Architects Continuing Education Systems. Credit earned on completion of this program is reported to CES Records for AIA members. Certificates of Completion for non-AIA members are available upon request. This program is registered with the AIA/CES for continuing professional education. As such, it does not include content that may be deemed or construed to be an approval or endorsement by the AIA of any material of construction or any method or manner of handling, using, distributing or dealing in any material or product. Questions related to specific materials, methods and services will be addressed at the conclusion of this presentation. Learning objectives Review the 2014 U.S. economy, including employment, interest rates, materials, foreign trade and construction starts Understand and discuss historical data and key construction forecasts for all segments of the industry Anticipate business opportunities, target growth markets, compare sales performance against market performance and create more informed and successful sales and business plans Understand the impact of current market conditions and how those will impact the performance of various construction sectors 5 #CMDInfo

6. Speaker Alex Carrick Chief Economist, CMD  Recently named CMD’s North American Chief Economist, Alex Carrick has served since 1985 as Chief Economist for CanaData and Reed  Alex’s online analyses are a popular feature of the Daily Commercial News and Journal of Commerce.  BA in Economics from the University of Western Ontario and an MA in Economics from the University of Toronto. 6 @Alex_Carrick

7. One in three Americans lives in one of only four states 7 #CMDInfo

8. The top 10 U.S. oil producing states 8 #CMDInfo

9. Source: U.S. Bureau of the Census/Chart: CMD. U.S. has reduced its oil import dependency from 2/3s to 1/2 of all demand; approaching self-reliance in natural gas. Also, U.S. is repatriating jobs in energy-intensive industries (e.g., petrochemicals). Aug United States’ foreign trade: goods and services balance 9 #CMDInfo

10. Top 10 U.S. states by manufacturing employment 1 st place California has 40% more workers in manufacturing than 2 nd place Texas. 10 #CMDInfo

11. States with motor vehicle assembly plants Michigan is the leader with 12. Grand total = 45. 11 #CMDInfo

12. States with the most IT firms Source: Infoworld. Massachusetts, Washington and Maryland also prominent in high-tech employment. 12 #CMDInfo

13. Data source: Payroll Survey, Bureau of Labor Statistics (U.S. Department of Labor)/Chart: CMD. U.S. employment: computer systems design services - level 13 #CMDInfo

14. Data source: U.S. Census Bureau and Bureau of Labor Statistics/Chart: CMD. U.S. state population growth table: 2012 to 2013 14 #CMDInfo

15. U.S. median household income 15 #CMDInfo

16. Median age of the population in U.S. states, census year 2010 16 #CMDInfo

17. Data source: Payroll Survey, Bureau of Labor Statistics (U.S. Department of Labor)/Chart: CMD. U.S. total employment – level (based on seasonally adjusted data) May 2014 the turning point 17 #CMDInfo

18. Data source: U.S. Department of Labor/Chart: CMD. U.S. initial jobless claims (weekly data) The latest data point is for the week ending October 25, 2014 (287,000). 18 #CMDInfo

19. Data source: Household Survey, Bureau of Labor Statistics (U.S. Department of Labor)/Chart: CMD. U.S. construction unemployment rate (not seasonally adjusted) 19 #CMDInfo

20. Data source: Payroll Survey, Bureau of Labor Statistics (U.S. Department of Labor)/Chart: CMD. U.S. construction employment – level (based on seasonally adjusted data) 20 #CMDInfo

21. Source of original data: U.S. Bureau of Labor Statistics/Calculation of composite ranking and table: CMD. Ranking of labor markets in major U.S. cities Best (#1) to Worst (#49) − Fall 2014 Based on year-over-year job growth (highest to lowest) and unemployment rates (lowest to highest). 21 #CMDInfo

22. Data source: CMD “Insight”/Table: CMD. Q3 year-to-date U.S. construction starts ‒ CMD ‒ historical comparisons Color coding: red is hot; blue is cool; green separates out residential. Ranking Based on $ Volume in Column (A) 22 #CMDInfo

23. Data source: CMD “Insight”/Table: CMD. Q3 year-to-date U.S. construction starts ‒ CMD ‒ historical comparisons Color coding: red is hot; blue is cool; green separates out residential. Ranking Based on % Change in Column (C) 23 #CMDInfo

24. Data source: Payroll Survey, Bureau of Labor Statistics (U.S. Department of Labor)/Chart: CMD. U.S. employment: architectural and engineering services - level 24 #CMDInfo

25. Data source: CMD/ Oxford Economics. Table: CMD. U.S. construction starts forecasts ‒ current $ billions ‒ CMD/Oxford Economics 25 #CMDInfo

26. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. total construction starts – CMD 26 #CMDInfo

27. Key determinants of residential construction Source of actuals: CMD “Insight”/ Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. total residential construction starts – CMD Jobs; Incomes; Demographics; Mortgage rates; Home prices; Second home demand; Move-up market; Empty-nester market; Foreign demand. 27 #CMDInfo

28. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. total non-residential building starts – CMD 28 #CMDInfo

29. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. total commercial construction starts – CMD 29 #CMDInfo

30. Key determinants of office building construction U.S. employment: accounting and bookkeeping services - level Office-based employment; Well-being of financial sector; Office vacancy rates; “Cap” rates; Buy versus build; Public portion vs private. Data source: Payroll Survey, Bureau of Labor Statistics (U.S. Department of Labor)/Chart: CMD. 30 #CMDInfo

31. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. private office building construction starts – CMD 31 #CMDInfo

32. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. government office building construction starts – CMD 32 #CMDInfo

33. Key determinants of retail construction U.S. retail sales – three months smoothed Jobs; Incomes; Gasoline prices; Motor vehicle sales; Stock market prices; New electronic gadgets; Confidence. Data source: U.S. Census Bureau (Department of Commerce)/ Chart: CMD. Sep 33 #CMDInfo

34. Data source: Payroll Survey, Bureau of Labor Statistics (U.S. Department of Labor)/Chart: CMD. U.S. retail trade employment – level (based on seasonally adjusted data) 34 #CMDInfo

35. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. retail/shopping construction starts – CMD 35 #CMDInfo

36. Key determinants of warehouse construction Retail trade; Foreign trade; Internet trade; Arrival of new retail competitors; New border crossings; New port/airport facilities. Source of actuals: CMD “Insight”/ Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. warehouse construction starts – CMD 36 #CMDInfo

37. Key determinants of hotel/motel construction U.S. employment: leisure and hospitality services - level Jobs and incomes; Business climate; Special events; Free trade agreements; Cost of gasoline and jet fuel; Value of U.S. dollar. Data source: Payroll Survey, Bureau of Labor Statistics (U.S. Department of Labor)/Chart: CMD. 37 #CMDInfo

38. Data source: Payroll Survey, Bureau of Labor Statistics (U.S. Department of Labor)/Chart: CMD. U.S. employment: autos and parts manufacturing versus the gaming industry - level 38 #CMDInfo

39. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. hotel/motel construction starts – CMD 39 #CMDInfo

40. Key determinants of industrial construction New York Stock Exchange – Dow Jones Industrials (30) Capacity utilization rates; Corporate profits; Stock markets; Commodity prices; Resource demand outlook; Value of U.S. dollar; World trade. Data Source: Reuters/Chart: CMD. Oct 40 #CMDInfo

41. New York Stock Exchange – Standard and Poor’s (500) Data Source: Reuters/Chart: CMD. Oct 41 #CMDInfo

42. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. total industrial/manufacturing construction starts – CMD 42 #CMDInfo

43. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. total institutional construction starts – CMD 43 #CMDInfo

44. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. total educational construction starts – CMD 44 #CMDInfo

45. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. elementary and pre-school construction starts – CMD 45 #CMDInfo

46. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. junior and senior high school construction starts – CMD 46 #CMDInfo

47. Key determinants of school construction U.S. college and university construction starts – CMD Demographics; Age distribution; Unemployment rate; Financial health of states and school boards; Bond markets; Stock markets; Endowment funds. Source of actuals: CMD “Insight”/ Forecasts: Oxford Economics and CMD/Chart: CMD. 47 #CMDInfo

48. Key determinants of health care construction U.S. resident population aged 65 and over Growing population; Aging population; State balance sheets; Financial strength of HMOs; Graduated seniors care; Latest medical advances. Source of actuals: U.S. Census Bureau/Chart: CMD. 48 #CMDInfo

49. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. hospital and clinic construction starts – CMD 49 #CMDInfo

50. Key determinants of engineering construction U.S. total heavy engineering/civil construction starts – CMD Age of Infrastructure; Population change (need for new infrastructure); Financial health of all levels of government; Commodity prices; Dedicated taxes. Source of actuals: CMD “Insight”/ Forecasts: Oxford Economics and CMD/Chart: CMD. 50 #CMDInfo

51. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. bridge construction starts – CMD 51 #CMDInfo

52. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. roadwork construction starts – CMD 52 #CMDInfo

53. Source of actuals: CMD “Insight”/Forecasts: Oxford Economics and CMD/Chart: CMD. U.S. water and sewage treatment construction starts – CMD 53 #CMDInfo

54. NASDAQ Composite Index Data Source: Reuters/Chart: CMD. Oct 54 #CMDInfo

55. Details 55 #CMDInfo

56. U.S. economic outlook – Fall 2014 Data sources: Bureau of Economic Analysis (BEA), Housing and Urban Development (HUD) and Department of Labor. Table and forecasts: CMD. 56 #CMDInfo

57. U.S. housing starts forecasts (units) Source of actuals: Census Bureau / Forecasts: CMD/Oxford Economics "Insights". Table: CMD. 57 #CMDInfo

58. Data source: CMD/Table: CMD. U.S. regional non-residential building construction starts – CMD - through three quarters, 2014 58 #CMDInfo

59. Data source: CMD/Table: CMD. U.S. regional heavy engineering/civil construction starts – CMD - through three quarters, 2014 59 #CMDInfo

60. Data source: Bureau of Labor Statistics. Table: CMD. U.S. Producer Price Index results ‒ Sept 2014 * m/m is based on seasonally adjusted data. 60 #CMDInfo

61. Speaker Kermit Baker Chief Economist, American Institute of Architects  Originated AIA’s Architecture Billings Index and AIA Consensus Construction Forecast Panel  Honorary member of the AIA  Master’s degree in urban planning from Harvard University; Ph.D. from Massachusetts Institute of Technology 61 @AIANational

62. - Broad trends in the construction activity; - Tracking the housing recovery; - Issues facing the nonresidential building industry; - Outlook for the nonresidential sector for 2015 and beyond; Overview 62 #CMDInfo

63. Since Downturn, Construction Activity Has Been a Declining Share of Our Economy Residential and nonresidential construction spending as a % of GDP Source: U.S. Census Bureau. 63 #CMDInfo

64. Construction Recovery for This Cycle Has Been Painfully Slow for Most Sectors Note; 2014 estimated through first three quarters; home improvement spending estimated from JCHS LIRA; Source: JCHS and U.S. Census Bureau Construction Spending Put-in-Place Spending at various points in the past construction cycle ($Billions) 64 #CMDInfo

65.   Tracking the Housing Recovery 65 #CMDInfo

66. In Recent Years, Total Housing Demand Has Been Well Below Trend of Past Several Decades Source: U.S. Census Bureau. Residential completions plus mobile home placements, millions of units 66 #CMDInfo

67. House Prices Continue to Recover, Having Gained Back More than 60% of Their Losses Single-family house price index (Jan. 2000=100) Source: CoreLogic National House Price Index (HPI), Single family attached and detached structures as of July, 2014 67 #CMDInfo

68. House Prices Are Recovering the Fastest in Many Previously Distressed Markets Change in Zillow Home Value Index (ZHVI) – Median estimated home value for all homes, August 2013 – August 2014 (Percent) 10 metros with largest increase 10 metros with largest decrease Notes: Metro areas mapped are top 50 by 2010 U.S. Census Bureau Population Source: JCHS calculations of Zillow, Median estimated home value for all homes (includes single family residence, condo/co-op). National change = 6.6% 68 #CMDInfo

69. House Price-to-Income Ratios Currently Close to Historical Averages in Most Large Metro Areas Source: National Association of Realtors (NAR): Real Estate Outlook; U.S. Bureau of Economic Analysis (BEA); U.S. Census Bureau (BOC); Moody's Analytics (ECCA) Estimated Residential single-family existing house price to household income, (ratio, SA) 69 #CMDInfo

70. Housing Starts Expected to Increase Sharply, But Still Years Away From Returning to Historical Levels Fannie Mae Freddie Mac Moody’s AnalyticsMBANAHBNAR Wells Fargo Zelman & Assoc. Standard & Poor’s Consensus (average) 2014 1.011.021.01 1.020.991.02 1.01 (+11%) 2015 1.171.301.531.161.241.281.121.181.28 1.25 (+24%) 2016 NA 1.91NA1.54NA1.251.361.53 1.52 (+22%) F’cast Date Sep-14 Oct-14Sep-14 Oct-14 Sep-14 Total Housing Starts (millions) 70 #CMDInfo

71. Nonresidential Building Trends and Outlook 71 #CMDInfo

72. Institutional Categories Account for Over Half the Spending on Nonresidential Buildings Share of U.S. nonresidential building construction spending, 2004-2013 Source: Construction Spending Put-in-Place, U.S. Department of Commerce 2004-2013 average = $384.7 billion Commercial/Industrial = $169.3 billion Institutional = $ 215.4 72 #CMDInfo

73. Since the 2011 Market Bottom, Nonresidential Building Spending Has Seen Only Modest Recovery Note: Nonresidential construction categories covered include: commercial, office, lodging, manufacturing, health care, educational, religious, public safety, amusement and recreation, transportation, communication. Source: U.S. Department of Commerce, Construction Spending Put-in-Place, estimate through June 2014. National spending, and annual percent change in spending, on nonresidential buildings* 73 #CMDInfo

74. Nonresidential Building Activity Improves Modestly Through First Three Quarters of 2014 Sep 2014 p Sep 2013 % change Total Nonres. Bldg. Construction $276.4 $263.8 4.8% Commercial/Industrial 123.7 109.4 13.1% Lodging 11.6 9.8 18.2% Office 32.1 27.3 17.6% Commercial (retail and other) 41.1 37.2 10.3% Manufacturing 38.9 35.1 11.0% Institutional 152.7 154.4 -1.1% Health care 28.9 31.1 -7.0% Educational 60.1 60.1 0.0% Religious 2.7 2.8 -3.5% Public safety 6.9 7.2 -4.6% Amusement and recreation 12.0 11.3 6.2% Transportation 30.3 29.4 3.0% Communication 11.8 12.4 -5.2% Source: U.S. Census Bureau, Value of Construction Put in Place Billions of $, NSA, totals for Jan – Sep, 2014 74 #CMDInfo

75. At Present, Coastal Markets Have Lower Office Vacancy Rates Source: Cushman and Wakefield Overall Office vacancy rates for top 5 and bottom 5 major U.S. markets, Q3-2014 75 #CMDInfo

76. Construction Employment Off From Peak; Heaviest Losses in New Construction Oriented Occupations 20072012Percent Chg. Drywall Installers272175-35.7% Supervisors & Managers2,2251,535-31.0% Masons395274-30.8% Plasterers5440-26.9% Flooring Installers251188-25.3% Carpenters1,8211,407-22.7% Painters & Paperhangers798677-15.2% Plumbers593510-14.0% Laborers & Helpers2,4692,224-9.9% Electricians695646-7.1% Glaziers3433-1.9% Roofers313309-1.3% Insulation Workers50525.3% Total9,9698,068-19.1% Source: JCHS tabulations of the US Census Bureau, American Community Survey (ACS). Number of people employed in the construction industry (000s) 76 #CMDInfo

77. Average Age of Construction Workforce Has Increased Since Downturn Share of population in construction industry labor force Notes: In 2007, 10.0 million people were occupied in the construction industry. This estimate fell to 8.1 million in 2012. Annualized earnings of $15,000 a year is roughly equivalent to working year-round at the federal minimum wage. Source: JCHS tabulations of the US Census Bureau, American Community Survey (ACS). 77 #CMDInfo

78. Though Volatile Recently, Architecture Billings Are in the Midst of a Strong Upturn… Source: AIA Architecture Billings Index diffusion index: 50 = no change from previous month, seasonally adjusted 78 #CMDInfo

79. …And the Volume of New Design Contracts Indicates That Billings Will Continue to Accelerate Source: AIA Architecture Billings Index diffusion index: 50 = no change from previous month, seasonally adjusted 79 #CMDInfo

80. Projects Stalled During Downturn Starting to Resurface % of responding firms Source: The American Institute of Architects Work on the Boards Survey, September, 2014. 80 #CMDInfo

81. Recent Upturn Has Lifted Business Conditions For Firms Serving All the Major Construction Sectors Source: AIA Architecture Billings Index Billings scores since 2008; index: 50 = no change from previous month 81 #CMDInfo

82. Annual Percent Change Commercial Construction Upturn Paces Broader Nonresidential Building Recovery Billions of $ of Construction Spending Source: AIA Consensus Construction Forecast Panel, July, 2014 82 #CMDInfo

83. Speaker Ken Simonson Chief Economist, AGC of America  AGC Chief Economist since 2001; 2012-13 President, National Association for Business Economics  Writes The Data DiGest weekly construction economics bulletin with 47,000 subscribers  BA in economics from the University of Chicago and MA in economics from Northwestern University 83 @KenSimonson

84. Source: BLS, Census Bureau construction spending reports 84 Construction spending & employment, 2006-14 84 12-month % change, Jan. 2006-Sept. 2014 9/14: $951 bil. 12-month % change, Jan. 2006-Sept. 2014 9/14: 6,079,000 #CMDInfo

85. Construction is growing, but unevenly 3 trends helping many sectors and regions: ‘Shale gale’ Panama Canal expansion Residential revival, especially multifamily 3 trends holding down construction growth: Government spends less on schools, infrastructure Consumers switch from stores to online buying Employers shrink office space per employee Source: Author 85 #CMDInfo

86. One (or many) bright spot(s): the shale ‘gale’ Source: U.S. Energy Information Administration Haynesville Eagle Ford Bakken Marcellus Niobrara Permian 86 #CMDInfo

87. Shale’s direct and indirect impacts on construction Onsite: Each well requires access road, site prep, pad, storage pond, support structures, pipes Nearby: Products, water require trucking, rail, pipeline, processing Local spending by drilling firms, workers, royalty holders Upstream: orders for fracking sand, rigs, compressors, pumps, pipe, tanks, trucks, railcars, processing facilities Downstream: Petrochemical, power, steel plants; LNG export terminals, fueling stations; LNG-powered vehicles Losers: coal; maybe wind, solar, nuclear & suppliers Source: Author 87 #CMDInfo

88. U.S. ports affected by Panama Canal expansion Source: U.S. Army Corps of Engineers Baltimore NY-NJ Norfolk Seattle & Tacoma Charleston San Diego Oakland Miami Savannah Jacksonville Mobile Columbia River at Mouth, OR & WA Los Angeles/ Long Beach New Orleans Houston 88 #CMDInfo

89. Panama Canal expansion’s impacts on construction Ports: investing in dredging, piers, cranes, land access Nearby: Storage, warehouse, trucking, rail facilities Bridge, tunnel, highway improvements Inland: possible changes in distribution, manufacturing Source: Author 89 #CMDInfo

90. Source: Census Bureau construction spending reports 90 Private residential spending: MF still soaring, SF slowing Private residential spending, Jan. 2011-September 2014 (billion $, SAAR) Multifamily (MF) Single family (SF) Improvements Improvements: -17% Single family: 10% Multifamily: 26% Total: 1% 12-month % change, Jan. 2011-September 2014 #CMDInfo

91. Housing outlook SF: rising for now but tight credit, fear of lock-in, demographic shifts may limit increases MF: Upturn should last into 2015 –Vacancy rates near multi-year lows in most cities –Preference for urban living adds to demand –Condos have been slower to revive than rentals –Government-subsidized market likely to worsen Improvements: should generally track SF sales Source: Author 91 #CMDInfo

92. Nonres segments, 2013 & 2014 forecast (billion $, SAAR) Source: Census Bureau construction spending report; Author’s forecast 92 9/14 Total2013 vs. 20122014 Forecast Nonresidential$596billion % 4-8% Power (incl. oil & gas structures, pipelines) 95 -7 10+ Highway and street 8010 to -5 Educational 80 -8 0 to -5 Commercial (retail, warehouse, farm) 5880 to 5 Manufacturing 55010+ Office 4500 to 5 Transportation 40 52 to 5 Health care 38 -2 0 to -5 Sewage and waste disposal 23 -3 Lodging 172510+ Amusement & recreation 160 Other (Communication; water; public safety; conservation; religious): 8% of total -2 #CMDInfo

93. Source: Census Bureau construction spending reports 93 Construction spending: public works (billion $, SAAR) Highways (99.8% public) Amusement & recreation (55% public) Sewage/waste (99% public) Water supply (96% public) Latest 12-mo. change: -1.7%Latest 12-mo. change: 1% Latest 12-mo. change: -2% #CMDInfo

94. Source: Census Bureau construction spending reports 94 Construction spending: industrial, heavy (billion $, SAAR) Power (88% private) Transportation facilities (71% public) Manufacturing (99% private) Public & private transportation facilities Latest 12-mo. change: 2% (private 2%; public - 0.1%) Latest 12-mo. change: 1% Latest 12-mo. change: 16% Latest 12-mo. change: private 6%; public -1% Public Private #CMDInfo

95. Source: Census Bureau construction spending reports 95 Total education (79% public) Construction spending: institutional (private + state/local) Total healthcare (72% private) Education (state & local K-12, higher; private) Hospitals (private, state & local) Latest 12-mo. change: 7% Latest 12-mo. change: -8% Latest 12-mo. change: private -10%; state & local -9% S/L preK-12 Private S/L higher ed S/L Private Latest: state/local preK-12 6%, higher 12%; private 3% #CMDInfo

96. Source: Census Bureau construction spending reports 96 Construction spending: developer-financed (billion $, SAAR) Retail (private) Warehouse (private) Office (83% private) Lodging (private) Latest 12-mo. change: 5% Latest 12-mo. change: 56% Latest 12-mo. change: 15% Latest 12-mo. change: 16% (private 18%; public 6%) Private Public Total #CMDInfo

97. Source: BLS state and regional employment report 97 -2% 5% -1% 6% -3% 1% 7% 13% -6% 4% 0% 10% 0.5% 1% 2% 5% 7% 5% 1% 8% 4% 6% 5% 6% -1% -3% 3% -0.1% 1% 3% 2% 4% 5% 11% 3% -6% 9% 11% HI 2% 4% VT 4% CT 6% RI 4% DE 13% NJ -8% MD 3% DC 0% NH -2% Over -10%-5.1% to -10%-0.1% to -5%0.1% to 5% MA 1% State construction employment change (U.S.: 3.9%) 9/13 to 9/14: 39 states up, 10 down 5.1% to 10%Over 10% Shading based on unrounded numbers 0% 6% #CMDInfo

99. Source: Author, from BLS national and state & area employment data (www.bls.gov/ces. www.bls.gov/sae)www.bls.gov/ceswww.bls.gov/sae 99 Construction employment, Sep. ‘14 vs. peak US:construction -21% (-1.6 million) below Apr. ‘06 peak States: La., Okla. and N.D. at new peak in 2014, 43 states > 10% below Metros: only 33 of 339 at new Sep. peak, not seas. adjusted F Peak in 2014 Within 10% of peak >10% below peak #CMDInfo

100. Source: Author, from Census Bureau (spending), BLS (employment, hours, PPI) 100 Spending +19% but jobs only +10%. How do they do it? Contractors charging more: PPI +11% (nonresidential buildings) More hours per worker: aggregate hours +13% (+2% per employee) Implication: further spending growth will trigger larger pickup in hiring—but will workers be available? 7% real Construction spending, labor & prices, 9/10-9/14 19% total 11% price change #CMDInfo

101. Source: Author, from BLS 101 Change in construction (un)employment, 10/10-10/14 Construction unemployment fell sharply in past 4 years But industry employment rose much less Thus, workers left for other sectors, school, retirement Unemployment rates (Not seasonally adjusted, Oct. 2010-Oct. 2014) Change in unemployment & employment (Not seasonally adjusted, Oct. 2010-Oct. 2014) 315,000 Workers who have left industry #CMDInfo

102. Source: AGC Member Survey, Jan. 2014 102 Hardest positions to fill (% of respondents who are having trouble filling) Craft Carpenters66% Roofers64 Equipment operators59 Plumbers54 Electricians52 Professional Project managers/supervisors48% Estimators32 #CMDInfo

103. 103 Source: Author, based on Bureau of Labor Statistics for Producer Price Indexes (PPIs) and Employment Cost Index (ECI); Federal Highway Administration for NHCCI Material & labor costs vs. nonresidential building prices 12/10-9/14 ECI (empl. cost) 9/13-9/14: 1.4% PPI for nonres buildings 9/13-9/14: 3.1% PPI for materials 9/13-9/14: 1.6% 12/10 #CMDInfo

104. Source: Author, based on BLS producer price index reports 104 Producer price indexes for key inputs, 12/10-9/14 (Dec. 2010=100) Steel mill products Gypsum products Copper & brass mill shapes Lumber & plywood Latest 1-mo. change: 0.1%, 12-mo.: 5% Latest 1-mo. change: -0.1%, 12-mo.: 7% Latest 1-mo. change: -0.8%, 12-mo.: -2% Latest 1-mo. change: 0.3%, 12-mo.: 11% 12/10 #CMDInfo

105. 105 Producer price indexes for key inputs, 12/10-9/14 (Dec. 2010=100) Source: Author, based on BLS producer price index reports Plastic construction products Concrete products Asphalt paving mixtures & blocks Latest 1-mo. change: -1.4%, 12-mo.: -8% Latest 1-mo. change: -0.2%, 12-mo.: 2% Latest 1-mo. change: -0.3%, 12-mo.: 4% Latest 1-mo. change: -0.1%, 12-mo.: 2% Diesel fuel 12/10 #CMDInfo

106. Best prospects for 2014-15 Multifamily Manufacturing, esp. petrochemical, oil/gas supply Oil & gas fields Pipelines Warehouses Lodging (hotels & resorts) Rail Data centers Source: Author 106 #CMDInfo

107. Trends: 2014-2017 Total construction spending: +6% to +10% per year –less SF housing, retail; declining public spending –new drivers: shale-based gas & oil; Panama Canal widening; more elderly & kids, fewer young adults Materials costs: +1 to +3% (similar to CPI); rare spikes Labor costs: +2.5% to + 5% Labor supply: widespread shortages possible due to retirements, competition from other sectors, fewer vets Source: Author 107 #CMDInfo

108. Summary for 2013, 2014-17 Source: 2012: Census, BLS; 2013-17: Author’s ests. 2013 actual 2014 forecast 2015-17 ann. avg. forecast Total spending6%6-9% 6-10% Private – residential20%6-10% 1-10% – nonresidential1%12-15% 1-10% Public-3%-1 to +2% 0 or less Materials PPI1.3%1-2% 1-3%; rare spikes Employment cost index2.0%1.5-2.5% 2.5-5% 108 #CMDInfo

109. AGC economic resources (email simonsonk@agc.org)simonsonk@agc.org The Data DIGest: weekly 1-page email (subscribe at www.agc.org/datadigest)www.agc.org/datadigest monthly press releases: spending; PPI; national, state, metro employment state and metro data, fact sheets website: http://www.agc.org/Economics http://www.agc.org/Economics webinars: Nov. 20 (email for details) 109 @AGCofA

110. This concludes The American Institute of Architects Continuing Education Systems Program Questions & Answers #CMDInfo

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