Wright Express Releases Monthly Construction Fuel Consumption Index (FCI) Results
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SOUTH PORTLAND, ME--December 23, 2011: Wright Express Corporation , a leading global provider of value-based business payment processing and information management solutions, in collaboration with IHS, the leading global source of information and analysis, today released results of its Wright Express Construction Fuel Consumption Index (FCI), which indicated an increase of 1.8% on an annual basis in November.
“The analysis of the November 2011 FCI data provides additional evidence that the construction industry is beginning to recover from low levels”
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 construction segment comprises approximately 20% of the Wright Express portfolio of customers.
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 November 2011, the Wright Express Construction FCI reported that fuel consumption by U.S. construction companies rose by 1.8% versus November 2010; and increased by 0.6% versus the previous month.
"The analysis of the November 2011 FCI data provides additional evidence that the construction industry is beginning to recover from low levels," said Michael Dubyak, Wright Express Chairman and Chief Executive Officer. "While the small size of the gains suggests a true recovery for the construction industry is not imminent, consistent annual growth provides a measure of confidence."
The Wright Express Construction FCI, which is available monthly in advance of the U.S. Census Bureau figures on construction spending, is available at Wright Express FCI.
November 2011 Wright Express Construction Fuel Consumption Index (FCI)
According to the Wright Express Construction FCI, growth in the seasonally adjusted index has been modest in 2011. On an annual basis, it grew 1.8% versus its level a year earlier. The index has experienced positive year-over-year gains throughout 2011, as the construction industry recovers from low levels.
IHS Analysis
According to the IHS analysis, the November result of the Wright Express Construction Fuel Consumption Index reflects the slow speed of the construction recovery. Throughout 2011, the index had small year-over-year growth, while monthly gains and losses have been modest. The November housing starts and housing permits report shares a similar message. Both starts and permits reached their highest levels in 19 months and 20 months, respectively. Almost all of the growth is occurring in multi-family housing thanks to rising rents, falling vacancy rates, falling homeownership rates, and an economy that is producing enough jobs to sustain a moderate recovery. Housing starts are expected to perform well in coming months. Despite improving conditions, it's important to keep in mind that the construction industry is still a long way off from a full recovery.
The Wright Express Construction FCI for November 2011 is available at Wright Express FCI.
Index Methodology
The Wright Express Construction Fuel Consumption Index (Wright Express Construction FCI) was developed by IHS with support from Wright Express. The index is based on monthly fuel consumption statistics for the construction industry tracked by Wright Express's comprehensive fuel consumption database. The Wright Express Construction FCI provides unique fuel transaction information that can be used to identify emerging trends in the construction industry. By tracking the volume of fuel consumed by construction companies in the United States, the index provides an accurate and up-to-date indication of construction activity in the country.
The construction industry was defined by 1987 Standard Industry Classification (SIC) codes 15 (General building contractors), 16 (Heavy construction contractors), and 17 (Special trade contractors). Data from Wright Express's fuel transaction database was "cleaned" based on a criteria developed by IHS with input from Wright Express. The sample included only accounts that had been active for at least two years. In this way, IHS was able to effectively capture the construction market's fuel consumption activity. In order to create an accurate index, the fuel consumption data from each SIC industry code were weighted based on the number of companies in each industry.
IHS analyzed the relationship between sixteen different construction and housing indicators and the construction sector fuel consumption data provided by Wright Express. Correlation tests were conducted on each of the indicators against the volume of gallons consumed, the volume of gallons consumed per effective fueling day, the volume of gallons consumed per active card per effective fueling day. All series were tested at seasonally adjusted rates, as well as non-seasonally adjusted rates. 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. After determining the top three indicators, additional correlation tests were conducted to determine the optimal transformation of the Wright Express fuel consumption data. Through this analysis, it was revealed that the Wright Express Construction FCI for construction was a particularly strong indicator of the value of total construction put-in-place and construction industry employment in the United States. The overall correlation based upon monthly year-over-year growth rates from January 2002 to November 2011 was 0.898 for the number of new single-family homes for sales and 0.893 for total construction put-in-place.
| Indicator | Correlation | |
| New Single-Family Homes for Sale | 0.898 | |
| Total Construction Put-in-Place | 0.893 | |
| Construction Employment | 0.879 | |
| New Single-Family Homes for Sale - Under Construction | 0.873 | |
| Total Private Housing Under Construction | 0.858 | |
| S&P/Case-Shiller Home Price Index - Composite 20 Index | 0.832 | |
| Average Sales Price of Existing Single-Family Homes Sold | 0.822 | |
| Residential Construction Put-in-Place | 0.754 | |
| Total Housing Completions, Private | 0.721 | |
| New Single-Family Homes Sold - Completed | 0.711 | |
| Average Sales Price of New Single-Family Homes Sold | 0.698 | |
| Median Sales Price of New Single-Family Homes Sold | 0.657 | |
| Total Private Housing Starts | 0.511 | |
| New Single-Family Homes Sold | 0.511 | |
| Housing Permits, Private | 0.499 | |
| Nonresidential Construction Put-in-Place | 0.453 | |
| New Single-Family Homes Sold - Under Construction | 0.277 | |
About Wright Express
Wright Express Corporation is a leading global 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 subsidiaries include Wright Express Financial Services, Pacific Pride and Wright Express International, including Wright Express Prepaid Cards Australia and Wright Express Fuel Cards Australia. Wright Express and its subsidiaries employ more than 850 associates in six countries. For more information about Wright Express, please visit Wright Express.
