SOUTH PORTLAND, Maine (Aug. 27, 2013) - WEX Inc. (NYSE: WEX), a provider of corporate payment solutions, in collaboration with IHS, Inc., a global source of critical information and insight, today released results of its WEX Construction Fuel Consumption Index (FCI), which indicated an increase of 2.3% in July versus its level at the same time the previous year.
The WEX Construction FCI measures national fuel consumption statistics for the construction industry, which provides an accurate and up-to-date indication of construction activity in the U.S.
WEX worked with IHS to capture and analyze transaction data from its closed-loop network, which includes over 90 percent of domestic retail fuel locations. With this data, the WEX Construction FCI can be used to identify emerging trends within the construction industry and the national economy.
The indicators were tested at monthly, quarterly and annual frequencies, with the greatest insights produced using the year-over-year percent change of the monthly data. For July 2013, the WEX Construction FCI reported that fuel consumption by U.S. construction companies increased 2.3% versus July 2012 and decreased 0.02% versus the previous month.
The WEX Construction FCI, which is available monthly in advance of the U.S. Census Bureau figures on construction spending, is available at http://www.wexinc.com/fuel-consumption-index.
Last month’s WEX Construction FCI reflected the consecutive year-over-year increase for the index with an upsurge during nine of the last 10 months, and additional government data releases were generally in line with the 0.5% decrease indicated by the seasonally-adjusted index in June. Private residential construction decreased by 1.2% in June and construction spending, excluding improvements – a good measure of activity – also fell in the same period by 1.0%.
Meanwhile, housing starts dropped in June by 9.9% to an annual rate of 836,000, which was possibly hampered by poor weather conditions, and housing permits fell by 7.5% to an annual rate of 911,000, which reflected that builders were still dealing with a backlog of permits after the surge in April. Total construction put-in-place – released a month later than the WEX Construction FCI – decreased by 0.6% in June. While the total employment report for the country had an increase of 162,000 jobs, construction employment showed little change in July.
According to the IHS analysis, despite the lack of growth in July for the WEX Construction FCI, the housing market has been showing signs of improvement. New home sales increased by 8.3% in June to a 497,000-unit annual rate, which is a five-year high. However, existing home sales fell by 1.2% in June as a result of prices being pushed higher by tight inventories and a lower share of distressed sales. The supply of single-family homes in June inched up, but it remains near historical lows. Tight inventories are the main force that are holding sales back, therefore, as rising prices coax more homeowners into the marketplace, sales should pick up.
Underwater mortgages, which means owners can’t readily sell their homes, are part of the reason inventory is so constricted; however, as prices increase, more properties rise above the “water line”. In turn, rising mortgage rates have primarily affected refinancing, not purchases. Data on loan applications show that since rates started rising in April, the volume of refinancing applications has tumbled, but the amount of purchase applications has held steady. Loan demand is still strong, but some of that demand goes unsatisfied due to inaccessible credit. Additionally, standards are still very high, which makes it difficult for those with lower credit scores to obtain a mortgage.
The WEX Construction FCI for July 2013 is available at http://www.wexinc.com/fuel-consumption-index
