DOL Takes Critical Step in Heat Safety Rulemaking
The Department of Labor has taken an important step in addressing the dangers of workplace heat and moved closer to publishing a proposed rule to reducing the significant health risks of heat ex-posure for U.S. workers in outdoor and indoor settings.
On April 24, the department’s Occupational Safety and Health Administration presented the draft rule’s initial regulatory framework at a meeting of the Advisory Committee on Construction Safety and Health. The committee, which advises the agency on safety and health standards and policy matters, unanimously recommended OSHA move forward expeditiously on the Notice of Proposed Rulemaking. As part of the rulemaking process, the agency will seek and consider input from a range of stakeholders and the public at-large as it works to propose and finalize its rule.
In the interim, OSHA continues to direct significant existing outreach and enforcement resources to educate employers and workers and hold businesses accountable for violations of OSHA’s gen-eral duty clause, 29 U.S.C. § 654(a)(1) and other applicable regulations. Record-breaking tempera-tures across the nation have increased the risks people face on the job, especially in summer months. Every year, dozens of workers die and thousands more suffer illnesses related to hazard-ous heat exposure that, sadly, are most often preventable.
The agency continues to conduct heat-related inspections under its National Emphasis Program – Outdoor and Indoor Heat-Related Hazards, launched in 2022. The program inspects workplaces with the highest exposures to heat-related hazards proactively to prevent workers from suffering injury, illness or death needlessly. Since the launch, OSHA has conducted nearly 5,000 federal heat-related inspections.
By law, employers must protect workers from the dangers of heat exposure and should have a proper safety and health plan in place. At a minimum, employers should provide adequate cool wa-ter, rest breaks and shade or a cool rest area. Employees who are new or returning to a high heat workplace should be allowed time to gradually get used to working in hot temperatures. Workers and managers should also be trained so they can identify and help prevent heat illness themselves.
Multifamily Developer Confidence Declines in First Quarter
Confidence in the market for new multifamily housing declined year-over-year in the first quarter of 2024, according to results from the Multifamily Market Survey released May 9 by the National Association of Home Builders. The MMS produces two separate indices. The Multifamily Produc-tion Index had a reading of 47, down three points year-over-year, while the Multifamily Occupancy Index had a reading of 83, up one point year-over-year.
The MPI measures builder and developer sentiment about current production conditions in the apartment and condo market on a scale of 0 to 100. The index and all its components are scaled so that a number below 50 indicates that more respondents report conditions are poor than report con-ditions are good.
The MPI is a weighted average of four key market segments: three in the built-for-rent market (garden/low-rise, mid/high-rise and subsidized) and one in the built-for-sale (or condominium) market. All four of the components posted year-over-year declines: the component measuring gar-den/low-rise declined two points to 55, the component measuring mid/high-rise units fell five points to 36, the component measuring subsidized units dipped one point to 50 and the component meas-uring built-for-sale units posted a three-point decline to 39.
The MOI measures the multifamily housing industry’s perception of occupancies in existing apartments on a scale of 0 to 100. The index and all its components are scaled so that a number above 50 indicates more respondents report that occupancy is good than report it is poor. The read-ing of 83 indicates existing apartment owners are very positive about occupancy.
The MOI is a weighted average of three built-for-rent market segments (garden/low-rise, mid/high-rise and subsidized). The components measuring garden/low-rise units and mid/high-rise units both remained unchanged year-over-year, with a reading of 84 and 74, respectively. The component measuring subsidized units increased seven points to 94.
“Multifamily developers are concerned about higher interest rates for construction and develop-ment loans and tighter lending conditions that are taking place in the market right now,” said Tom Tomaszewski, president of The Annex Group and chairman of NAHB’s Multifamily Council. “There are also many areas across the country where developers are having a difficult time getting their projects approved.”
“Owners of existing apartments continue to report strong occupancy, but this has the potential to soften when more of the 900,000-plus apartments currently under construction come on line,” said NAHB Chief Economist Robert Dietz. “NAHB is currently projecting that multifamily starts will fall 28% this year as developer activity slows.”
The MMS was re-designed last year to produce results that are easier to interpret and consistent with the proven format of other NAHB industry sentiment surveys. Until there are enough data to seasonally adjust the series, changes in the MMS indices should only be evaluated on a year-over-year basis.
Higher Mortgage Rates Hammer Builder Confidence in May
With mortgage rates averaging above 7% for the past four weeks preceding May 15 per data from Freddie Mac, builder sentiment posted its first decline since November 2023.
Builder confidence in the market for newly built single-family homes was 45 in May, down six points from April, according to the National Association of Home Builders/Wells Fargo Housing Market Index released May 15.
“The market has slowed down since mortgage rates increased and this has pushed many potential buyers back to the sidelines,” said NAHB Chairman Carl Harris, a custom home builder from Wichita, Kan. “We are also concerned about the recent codes rules that require HUD and USDA to insure mortgages for new single-family homes only if they are built to the 2021 International Ener-gy Conservation Code. This will further increase the cost of construction in a market that sorely needs more inventory for first-time and first-generation buyers.”
“A lack of progress on reducing inflation pushed long-term interest rates higher in the first quar-ter and this is acting as a drag on builder sentiment,” said NAHB Chief Economist Robert Dietz. “The last leg in the inflation fight is to reduce shelter inflation, and this can only occur if builders are able to construct more attainable, affordable housing.”
The May HMI survey also revealed that 25% of builders cut home prices to bolster sales in May, ending four months of consecutive declines in this metric. However, the average price reduction in May held steady at 6% for the 11th straight month. Meanwhile, the use of sales incentives ticked up to 59% in May from a reading of 57% in April.
Derived from a monthly survey that NAHB has been conducting for more than 35 years, the NAHB/Wells Fargo HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair” or “poor.” The survey also asks builders to rate traffic of prospective buyers as “high to very high,” “average” or “low to very low.” Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view conditions as good than poor.
All three HMI component indices posted declines in May. The HMI index charting current sales conditions in May fell six points to 51, the component measuring sales expectations in the next six months fell nine points to 51 and the gauge charting traffic of prospective buyers declined four points to 30.
Looking at the three-month moving averages for regional HMI scores, the Midwest increased three points to 49, the Northeast fell two points to 61, the South dropped two points to 49 and the West posted a four-point decline to 43.
Prices for Nonresidential Construction Materials and Services Increase 0.4% in April
The price of materials and services used in nonresidential construction increased 0.4% from March to April, while an index that measures contractors’ bid prices inched up by 0.1%, according to an analysis by the Associated General Contractors of America of government data released May 14. Association officials cited a new survey of highway contractors that indicated inflexible federal Buy America mandates could lead to future price escalations and other disruptions to highway pro-jects.
“Prices for construction inputs have risen faster than contractors’ bids every month so far in 2024,” said Ken Simonson, the association’s chief economist. “In addition, persistently long lead times for electrical equipment are adding to the cost of many building and infrastructure projects. Meanwhile, inflexible rules for sourcing materials could drive up prices for federally aided projects such as highways.”
The producer price index for new nonresidential construction—a measure of what contractors report they would charge to put up a specific set of buildings—edged up 0.1% in April. That in-crease followed an identical rise in March, no change in February, and a gain of 0.3% in January, Simonson noted. In contrast, input prices climbed 0.4% in each of the past three months and 0.9% in January.
The association released results of a just-completed survey it conducted with the American Road and Transportation Builders Association to determine the impacts on highway construction from a proposed tightening of Buy America requirements. The survey was in response to a Federal High-way Administration proposal to roll back a longstanding waiver from these requirements for most manufactured products permanently incorporated into federal-aid highway projects.
More than two-thirds of the 192 respondents—69%—stated that they will “price” risks in their bids reflecting uncertainty about costs and/or availability of Buy America-compliant materials for particular projects. This reality usually results in higher project costs and diluted benefits from fed-eral investment. In addition, if FHWA rolls back its waiver, respondents expect significant chal-lenges in complying with Buy America requirements for many manufactured products. All eight categories of manufactured products included in FHWA’s Request for Information had a greater ratio of respondents indicating that compliance would be “Difficult” and “Very Difficult or Impos-sible” compared to “Easy” and “Possible.”
Association officials noted that fewer than 15% of respondents believe these products would “Easy” or “Possible” to acquire in compliance with a new FHWA Buy America policy. They added that respondents listed numerous additional products that would be difficult or impossible to source without waivers.
“Federal officials are attempting to shut down a diversified global supply chain for construction materials before enough domestic supply exists,” said Jeffrey D. Shoaf, the association’s chief ex-ecutive officer.
That’s a recipe for higher costs and delayed projects that will harm both the U.S. economy and highway safety.”
Led by Energy, Construction Materials Prices Surge in April
Construction input prices increased 0.5% in April compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price In-dex data released May 14. Nonresidential construction input prices increased 0.6% for the month.
Overall construction input prices are 2.3% higher than a year ago, while nonresidential construction input prices are 2.2% higher. Prices increased in 2 of the 3 energy subcategories last month. Crude petroleum prices were up 10.6%, while unprocessed energy materials prices increased 8.2%. Natural gas prices were down slightly by 0.9%.
“Construction input prices jumped half a percentage point higher in April and have increased 3.5% over the first four months of the year,” said ABC Chief Economist Anirban Basu. “While iron, steel, asphalt and gypsum product prices fell in April, oil and copper prices surged, driving the monthly increase. Rising input prices will put pressure on profits at a time when nearly 1 in 4 con-tractors expect their margins to contract over the next two quarters, according to ABC’s Construc-tion Confidence Index.
“Perhaps more importantly for contractors, the overall Producer Price Index reading for final demand goods and services increased 0.5% in April,” said Basu. “This is yet another sign that infla-tion is accelerating and suggests that interest rates are set to stay higher for longer.”
Nonresidential Construction Employment Strength Persists, Jobs Up 7,800 in April
The construction industry added 9,000 jobs on net in April, according to an Associated Builders and Contractors analysis of data released May 3 by the U.S. Bureau of Labor Statistics. On a year-over-year basis, industry employment has increased by 258,000 jobs, an increase of 3.2%.
Nonresidential construction employment increased by 7,800 positions on net, with growth regis-tered in all three major subcategories. Nonresidential specialty trade added the most jobs, growing by 6,600 positions. Nonresidential building and heavy and civil engineering added 900 and 300 jobs, respectively.
The construction unemployment rate fell to 5.2% in April. Unemployment across all industries rose from 3.8% in March to 3.9% last month.
“It is really quite remarkable that the nation’s nonresidential construction sector continues to add jobs so consistently in an environment characterized by elevated project financing costs,” said ABC Chief Economist Anirban Basu. “At the heart of growing demand for construction workers in America is the prevalence of megaprojects in many parts of the country, including major manufac-turing plants, data centers and public works.
“Based on ABC’s Construction Confidence Index, there is more hiring to come,” said Basu. “While there is observable weakness in certain industry segments, particularly in the challenging office market, ongoing spending growth in other construction segments has thus far more than fully countervailed that softness. Many megaprojects are just now beginning construction, strongly sug-gesting a stable U.S. nonresidential construction labor market for months to come. Such considera-tions are also consistent with relatively rapid increases in construction worker compensation during the balance of 2024.”
Equipment Finance Industry Confidence Eases in April
The Equipment Leasing & Finance Foundation’s April 2024 Monthly Confidence Index for the Equipment Finance Industry reports a qualitative assessment of both the prevailing business conditions and expectations for the future as reported by key execu-tives from the $1 trillion equipment finance sector. Overall, confidence in the equipment finance market is 52.9, the second highest index in the last two years after last month’s index of 55.2.
When asked about the outlook for the future, MCI-EFI survey respondent Mark Bonanno, presi-dent and chief operating officer, North Mill Equipment Finance, said, “Monetary policy has not been as effective in taming inflation that recently came in at an annual rate of 3.2%. The U.S. gov-ernment as well as the consumer (via credit cards) have unsustainable debt levels, and that will eventually cause cracks in the economy.”
The overall MCI-EFI is 52.9, a decrease from the March index of 55.2.
When asked to assess their business conditions over the next four months, 10.7% of the execu-tives responding said they believe business conditions will improve over the next four months, a decrease from 19.4% in March, and 85.7% believe business conditions will remain the same over the next four months, up from 77.4% the previous month. And 3.6% believe business conditions will worsen, relatively unchanged from 3.2% in March.
When asked, 7.1% of the survey respondents say they believe demand for leases and loans to fund capital expenditures (capex) will increase over the next four months, down from 25.8% in March. It will “remain the same according to 92.9%, up from 71% the previous month. None be-lieve demand will decline, a decrease from 3.2% in March.
Also, 14.3% of the respondents expect more access to capital to fund equipment acquisitions over the next four months, down from 16.1% in March while 71.4% of executives indicate they expect the “same” access to capital to fund business, down from 74.2% last month. And 14.3% expect “less” access to capital, up from 9.7% the previous month.
When asked, 17.9% of the executives report they expect to hire more employees over the next four months, a decrease from 19.4% in March. 71.4% expect no change in headcount over the next four months, up from 67.7% last month. 10.7% expect to hire fewer employees, down from 12.9% in March.
None of the leadership evaluate the current U.S. economy as “excellent,” unchanged from the previous month. The majority, 92.9% of the leadership, evaluate the current U.S. economy as “fair,” down from 93.6% in March, and 7.1% evaluate it as “poor,” up from 6.5% last month.
In addition,17.9% of the survey respondents believe that U.S. economic conditions will get “bet-ter” over the next six months, down from 25.8% in March, and 71.4% indicate they believe the economy will “stay the same” over the next six months, an increase from 54.8% last month. Only 10.7% believe economic conditions in the United States will worsen over the next six months, a decrease from 19.4% the previous month.
In April 17.9% of respondents indicate they believe their company will increase spending on business development activities during the next six months, a decrease from 22.6% the previous month. But the majority, 78.6%, believe there will be “no change” in business development spend-ing, up from 64.5% in March, and 3.6% believe there will be a decrease in spending, down from 12.9% last month.
ATAS Celebrates Groundbreaking for Building Expansion
On May 6 ATAS International held a groundbreaking ceremony for the expansion of their manu-facturing facility on Grant Way in Allentown, Pennsylvania. The existing 65,000 sq. ft. building was constructed in 2005, and the addition will add another 53,000 square feet. This will allow for additional metal forming equipment and employees to support ATAS’ expanding product line.
The existing Grant Way facility has a photovoltaic solar array on the roof and transpired solar collector metal wall panels installed on the south side of the building, making it very energy efficient.
GMS Acquires Howard & Sons Building Materials
On May 11 GMS Inc. acquired Howard & Sons Building Materials, Inc., which distributes wall-board, steel framing and complementary products from a single location in Pomona, California. With established strong manufacturer partnerships, Howard & Sons offers an array of products to its customer base in Southern California. The newly acquired company will transition to operate under existing GMS brand, J&B Materials.
