Construction Spending, Labor & Materials Outlook Economic Club of Las Vegas December 8, 2015 Ken Simonson Chief Economist, AGC of America

Summary for 2014, forecast Source: 2014: Census, BLS; : Author’s ests actual 2015 forecast annual average forecast Total spending5%10-12%6-10% Private – residential4%11-14%5-10% – nonresidential11%11-13%5-10% Public2%6-7%near 0 Materials PPI-0.9%-3 to -5%0-2% Employment cost index1.8%2-2.5%3-4.5%

2016 residential spending forecast: 5-9% SF: 4-8%; ongoing job gains add to demand; student debt, fears of lock-in, limited supply will cap growth MF: 8-12%; upturn should last through 2016 – low vacancies, high rent growth encourage investors – millennials show continued preference for cities – nearly all MF construction is rental, not condo – public MF is growing but remains tiny (1% of total) Improvements: 0-10%; should track SF sales but unreliable Census data show wide swings, revisions Source: Author

Jan.-Oct. YTD 2015 vs June-Oct annualized 2016 and 2017 (per year) Nonresidential total (public+private)11 % 46-10% Power (incl. oil & gas structures, pipelines) to 10 Educational 613 to 5 Highway and street 87-1 to +3 Manufacturing to +10 Commercial (retail, warehouse, farm) 850 to 10 Office 2235 to 15 Transportation 800 to 5 Health care 553 to 8 Sewage and waste disposal Amusement & recreation Lodging to +15 Other (communication; water; public safety; conservation; religious): 8% of total 513 Nonresidential segments: year-to-date, forecast Source: Census Bureau construction spending report; Author’s forecast

-0.1% 1.3% 1.1% 1.0% 1.3% 0.9% 0.2% 1.7% 1.5% 1.6% -0.1% 2.2% 0.9% 0.7% 0.3% 0.6% 1.7% 0.6% 0.5% 0.3% 0.4% 0.3% -0.1% 0.1% 0.4% 0.3% 0.1% 0.3% 0.2% 0.3% 0.05% 0.7% 1.0% 1.5% 0.1% -0.2% 0.3% 1.4% HI 0.8% 1.3% VT -0.05% CT -0.1% RI 0.2% DE 1.1% NJ 0.3% MD 0.6% DC 1.5% NH 0.3% decrease0-0.49% % % MA 0.5% Population change by state, July 2013-July 2014 (U.S.: 0.75%) 1.5%+ Source: U.S. Census Bureau News 0.8%

CT 2% 3% 7% 3% 7% 12% 5% 3% 11% 4% 7% -1% 1% 5% 0.2% 12% 5% 1% -4% 5% 1% 2% 3% 6% -2% 6% -1% 4% -1% 6% 2% 2% 1% 5% 0.4% -17% 18% 7% HI 9% 7% VT 1% MD 5% DC 1% NH 3% Over -10%-5.1% to -10%-0.1% to -5%0.1% to 5% MA 3% State construction employment change (U.S.: 3.9%) 10/14 to 10/15: 43 states + DC up, 1 unchanged, 7 down 5.1% to 10%Over 10% Shading based on unrounded numbers 0% Source: BLS state and regional employment report 3% NJ 7% DE 5% RI -6% 6%

Construction Employment in United States, 1/90-10/15 (seasonally adjusted; shading = recessions) Construction Employment in Nevada, 1/90-10/15 (seasonally adjusted; shading = recessions) Source: BLS Peak: Apr. ‘06 -17% vs. peak Peak: Jun. ‘06-52% vs. peak

Construction Employment Change from Year Ago 1/08-10/15 (not seasonally adjusted) Nevada 11% (4 out of 51) U.S. 4% Source: BLS Las Vegas-Henderson- Paradise 19% (3 out of 358) Reno 0% (181 out of 358)

Hardest positions to fill Source: AGC Member Survey, Sept. 2015

Unemployed construction workers, Nov Nov (not seasonally adjusted) Source: BLS

Flat glass Producer price indexes for key inputs, 12/10-10/15 (Jan. 2011=100) Source: Author, based on BLS producer price index reports Copper & brass mill shapes Aluminum mill shapes Latest 1-mo. change: 1.5%, 12-mo.: 1% Latest 1-mo. change: 0.3%, 12-mo.: 6% Latest 1-mo. change: -0.8%, 12-mo.: -13% Latest 1-mo. change: -0.3%, 12-mo.: -11% Gypsum products

Paving mixtures Producer price indexes for key inputs, 12/10-10/15 (Jan. 2011=100) Source: Author, based on BLS producer price index reports Concrete products Steel mill products Latest 1-mo. change: 3.4%, 12-mo.: -38% Latest 1-mo. change: -0.3%, 12-mo.: -6% Latest 1-mo. change: -0.1%, 12-mo.: 3% Latest 1-mo. change: -1.7%, 12-mo.: -16% Diesel fuel

Summary for 2014, forecast Source: 2014: Census, BLS; : Author’s ests actual 2015 forecast annual average forecast Total spending5%10-12%6-10% Private – residential4%11-14%5-10% – nonresidential11%11-13%5-10% Public2%6-7%near 0 Materials PPI-0.9%-3 to -5%0-2% Employment cost index1.8%2-2.5%3-4.5%

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