U.S. Construction Industry Fueling Up 1.4% Year-Over-Year in July; Up 0.2% versus Previous Month
SOUTH PORTLAND, Maine (Aug. 23, 2012) - Wright Express Corporation, a leading global provider of value-based business payment processing and information management solutions, in collaboration with IHS (NYSE: IHS), the leading global source of information and analytics, released results of its Wright Express Construction Fuel Consumption Index (FCI), which indicated an increase of 1.4% in July versus its level the previous year.
The Wright Express 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 United States.
"The results of the July 2012 Fuel Consumption Index indicate flat growth in the construction industry despite consistent year-over-year growth," said Rick Pomerleau, vice president, corporate development at Wright Express. "The construction industry hit a speed bump in June, showing the industry is still on a slow path to recovery."
Wright Express worked with IHS to capture and analyze transaction data from its closed loop network of more than 180,000 fuel and vehicle maintenance locations, including over 90 percent of the domestic retail fuel locations and 45,000 vehicle maintenance locations. With this data, the Wright Express 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 2012, the Wright Express Construction FCI reported that fuel consumption by U.S. construction companies increased by 1.4% versus July 2011 and increased by 0.2% versus the previous month.
Last month's Wright Express Construction FCI diverged from the increased construction spending levels evident in most of the government's subsequent construction data releases. Construction spending excluding improvements - a good measure of activity - expanded by 0.7% in June. Private residential construction increased by 3.1%, again reflecting the year's uptick in single-family housing starts. The decrease in June was reflected in housing permits, which decreased 3.7% in June to an annual rate of 755,000 due to a sharp drop in multi-family permits in the South. Total construction put-in-place increased by 0.4% in June.
IHS Analysis
According to the IHS analysis, the continued flat growth for the Wright Express Construction FCI in July, and with the additional loss in June, indicates a delayed recovery for the construction industry. New home sales fell 8.4% in June; however, the loss should not be considered significant due to an anomalous sales plunge in the Northeast. Despite the uncharacteristic decrease in June, the housing market remains on track for recovery with the three-month average showing new home sales gradually increasing.
The key obstacle to the housing recovery continues to be tight credit conditions, which is why sales to non-investors have been only inching up in recent months, despite low mortgage rates and plenty of affordable homes (in most markets). The homeowner vacancy rate measuring the proportion of homes that are vacant and for sale slipped 2.1% in the second quarter of 2012, which is still too high from the "normal" range of 1.6% - 1.7%. Home prices have been rising slowly in recent months and any gain in prices is good news because the price gains reduce the number of homeowners with "underwater" mortgages.
Wright Express is a leading provider of value-based, business payment processing and information management solutions. The Company's fleet, corporate and prepaid payment solutions provide its more than 350,000 customers with unparalleled security and control across a wide spectrum of business sectors. The Company's operations include Wright Express Financial Services, Pacific Pride, rapid! PayCard, Wright Express Prepaid Cards Australia, Wright Express Fuel Cards Australia and CorporatePay Limited, England. Wright Express and its subsidiaries employ more than 900 associates in six countries.
