US Building Materials Outlook Lowered

The outlook for the U.S. building materials sector has been lowered due to a decreased demand in private construction. Moody's Investors Service downgraded its outlook from positive to stable following four years of strong growth. "We expect lower organic operating income growth in the building materials sector over the next 18 months, as growth in...
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Somber Credit Managers’ Index Starts 4Q

After a string of solid results in NACM's Credit Managers' Index (CMI) starting this past spring, the predictive index is at its worst output since April. The October CMI reading dropped nearly two points to 54.5 from 56.4 in September. "This is not an emergency situation to be sure as these numbers are still solidly in the mid-50s, but it isn't th...
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Moody’s: US Oil Sector Debt Levels ‘Unsustainable’

The current debt levels of U.S. oilfield and drilling (OFS) companies is unsustainable over the long term. According to Moody's Investors Service, OFS companies need a "substantial improvement in cash flow." "U.S. oilfield services and drilling companies' high debt levels will continue to constrain their credit quality in 2019 and beyond," said Sre...
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Strategic Global Intelligence Brief for Oct. 26, 2018

Short Items of Interest—U.S. Economy Consumer Sentiment Up but Not as High as Before The level of consumer confidence has been elevated all year. This is better than it being lower than usual, but given that consumer confidence surveys can be notoriously fickle it is hard to really understand what they are indicating. This month, the level of confi...
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Sears Seeking Financial Help, Vendors Reacting

Sears Holdings Corp. Chairman Eddie Lampert is in the process of finding a financing partner for the company's bankruptcy filing. According to Reuters, Lampert's private equity firm, ESL Investments, has talked with investment firm, Cyrus Capital Partners LP, about sharing the financial burden of a $300 million loan. Meanwhile, some of Sears' vendo...
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September U.S. Housing Starts Take Step Back

U.S. housing starts did not turn out as expected in September, according to the latest release from the Census Bureau and Department of Housing and Urban Development. Privately-owned housing starts staggered slightly from August to a seasonally adjusted rate of 1.201 million in September. Economists surveyed by Reuters expected starts to decline, h...
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Dodge Momentum Index Takes Step Back

Construction spending in the nonresidential sector is taking a hit, according to a leading economic indicator. The Dodge Momentum Index, which has been shown to lead nonresidential building construction spending by one year, is in a bit of a slump following September's 2.6% downturn from August. The index also declined in August after a string of s...
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Trade Credit Insurance Payout Hits Quarterly High

Trade credit insurance payout is at an all-time high. According to the Association of British Insurers (ABI), the second quarter payout of one million pounds daily ($1.3 million) to help cover bad debts is a quarterly record. A total of 92 million pounds was paid to U.K. firms to combat bad debt, also a quarterly record, surpassing the previous mar...
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Amendment to Pennsylvania Construction Act to Take Effect in October

Only a few weeks remain until Pennsylvania's Contractor and Subcontractor Payment Act (CASPA) changes, shaking up the future of timeliness for construction payments. The new act will affect construction contracts entered into, on or after Oct. 10, 2018. In Pennsylvania, CASPA affects downstream payments on private construction projects. The amendme...
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New Funding Option for UK SMEs

A new funding option is in the future for small- and medium-sized enterprises (SMEs) in the United Kingdom. New laws put forward by Small Business Minister Kelly Tolhurst this week will "make it easier for small businesses to access invoice financing," according to a release from the government. This will in turn provide a one-billion-pound boost t...
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Residential Construction Jobs See Increase for August

Employment in the residential construction industry remains stable, sitting at 3.9% this August, according to the National Association of Home Builders (NAHB). Jobs increased by 201,000, and employment in residential construction continued to trend upward. The number of unemployed persons decreased by a total of 46,000, yet the number of employed p...
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End of Summer Brings CMI Out of Decline

NACM's Credit Managers' Index (CMI) turned a corner as the summer comes to a close, showing positive readings for the first time in two months. These higher readings show signs of stability for the near future, though the stability may not last with the threat of inflation and on-going trade wars. The combined CMI score for August went up by 0.3 po...
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Strategic Global Intelligence Brief for August 21, 2018

S hort Items of Interest—U.S. Economy How Will Fed Wind Down Portfolio? We know just a few things about the Fed's intent. We know they have decided to start exiting their $4.5 trillion position of mortgage-backed securities (MBSs) and Treasury bills. We know they want to get rid of most of the MBSs and remain in the T-bill market. How this is to ac...
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Nonresidential Spending Predicted to Grow in 2019

Nonresidential construction spending is expected to take a step back in 2019 compared to 2018; however, overall nonresidential building is still predicted to grow. At the start of the year, economists from different firms polled by The American Institute of Architects (AIA), said views have changed for the better, according to the recently released...
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Construction Spending Sees Yearly Climb, Despite MoM Dip

After steadily increasing over the past year, construction spending in June 2018 set the industry back a step month-over-month (MoM), yet maintained decent figures year-over-year (YOY). On August 1, MarketWatch reported about a 1% drop in June construction spending but more than a 6% climb since last year. Revised calculations revealed a MoM increa...
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B2B ACH Network Increases in 2018 2Q

The ACH Network continues to grow following another solid performance in the second quarter of 2018. ACH debit and credit transactions increased by 6.2% compared to the second quarter of 2017, according to NACHA—The Electronic Payments Association. That is equivalent to 5.7 billion more transactions. "The ACH Network provides substantial value to e...
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Strategic Global Intelligence Brief for July 26, 2018

Short Items of Interest—U.S. Economy GDP Revisions Lowered as Newest Data Disappoints The next GDP report doesn't come out until July 27 and already there has been some second guessing. A few weeks ago, there was some consensus around the notion that growth would be at least as high as 4.5% and perhaps 5.5%. This was slated to be the most robust qu...
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UK Councils Not Following 30-Day Payment Rule

Local authorities in the United Kingdom, known as councils, are facing backlash from construction associations after freedom of information (FOI) requests revealed about 90% of councils were not enforcing construction firms to pay supply chains within 30 days as required by legislation. Under "Miscellaneous Provisions" in Chapter Nine of the Public...
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Construction Material Prices ‘Rising Rapidly’

Economic progress is dwindling in the eyes of Associated Builders and Contractors (ABC) economists who reported a nearly 10% gain in 2018 construction material prices in June over last year. ABC noted a 9.6% increase in prices compared to 2017, with a 9.8% gain in nonresidential construction, during its analysis of U.S. Bureau of Labor Statistics d...
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Survey Shows Tax Reform Likely Will Not Increase Spending

Even with a tax reform passed by the Trump administration, corporate spending will likely not see an increase, according to a report from the Association for Financial Professionals (AFP). Forty percent of the 640 corporate treasury and finance executives surveyed do not expect their spending to change in the near future. Even though 60% said they ...
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