Wright Express Corporation, a global provider of value-based business payment processing and information management solutions, in collaboration with IHS, a global source of information, insight and analytics, released results of its Wright Express Construction Fuel Consumption Index (FCI), which indicated a decrease of 0.3 percent in April 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.
“Considering the seasonally-adjusted index grew by 3.9 percent in the previous month, the results of the April 2012 Fuel Consumption Index may be a partial correction to the unusually strong growth in March,” said Michael Dubyak, chairman and chief executive officer of Wright Express. “Meanwhile, recently released information about U.S. construction activity reflects the positive turn.”
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 April 2012, the Wright Express Construction FCI reported that fuel consumption by U.S. construction companies decreased by 0.3 percent versus April 2011 and decreased by 2.8 percent versus the previous month.
Last month’s Wright Express Construction FCI showed unusually strong growth in March and accurately captured the evident general improvement reflected in the most recent government industry data. Construction spending excluding improvements — a good measure of activity — grew 0.4 percent in March. Total construction put-in-place, increased by 0.1 percent in March. Also in March, private residential construction excluding improvements rose 2.9 percent, while private nonresidential spending increased by 0.7 percent.
Additionally, the Wright Express Construction FCI showed a similar pattern of volatility in March and April compared with the U.S. Census Bureau’s recently released statistics on housing permits. The number declined 7.0 percent in April to an annual rate of 715,000, after a revised increase of 8.7 percent in March.
According to the IHS analysis, despite recent gains, the industry’s growth has lost some momentum. After three years of depressed construction, the inventory of new housing is beginning to tighten. Similar to February, new home sales continued to decline in March, but inventory continues to shrink. This is good news since builders will have to replenish stocks by ramping up starts once demand rebounds. Although, getting rid of the excess housing supply could be a drawn-out affair. The homeowner vacancy rate measuring the proportion of homes that are vacant and for sale was 2.3 percent at the end of 2011. This vacancy rate is consistent with a glut of about one half of a million houses. At the current pace, eliminating the overhang should take less than two years, but will probably take longer, because it is concentrated in a few high-unemployment states.
For more information, visit www.wrightexpress.com/fci.