Wright Express Corporation (NYSE: WXS), an international
provider of business payment processing and information management
solutions, in collaboration with IHS (NYSE: IHS), a leading
provider of global economic and financial intelligence, today
released its inaugural Wright Express Construction Fuel Consumption
Index (FCI).
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 Consulting and Advisory Services
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 Wright Express Construction Fuel Consumption Index, through
our partnership with IHS, taps into our deep well of fuel
consumption data for real-time analysis. Each month, beginning with
the announcement of the August 2011 data, we plan to release
statistics that could be an aide in providing insights around
current construction activity and the overall economic landscape,"
said Michael Dubyak, Wright Express Chairman and Chief Executive
Officer.
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 August 2011,
the Wright Express Construction FCI reported that fuel consumption
by U.S. construction companies rose by 3.9% versus August 2010 and
expanded by 1.1% versus the previous month. The latest result
continues the trend of the index rising on an annual basis in every
month of 2011.
The Wright Express Construction FCI, which is scheduled to be
available in advance of the U.S. Census Bureau of the Department of
Commerce figures on construction spending, will be released on a
monthly basis going forward and made available at
www.wrightexpress.com/fci.
August 2011 Wright Express Construction Fuel Consumption
Index (FCI)
According to the Wright Express Construction FCI, the
construction industry appears to be trending upwards as evidenced
by the index increase of 3.9% on an annual basis in August. The
index has had positive year-over-year growth throughout 2011.
Consistent annual fuel consumption growth suggests the construction
industry is expanding, albeit rather slowly.
In August, the FCI saw a 1.1% increase over the previous month.
Growth in the seasonally adjusted index has been relatively flat in
recent months, and this month’s result marks the first change of
more than 1% since February.
IHS Analysis
According to IHS’s analysis, the August result of the Wright
Express Construction FCI is positive news for a market which needs
it. Nonetheless, this month’s result should be regarded with
caution, as the construction market remains fragile and the
recovery will be slow. U.S. construction activity is not expected
to really pick up until 2012. The residential construction category
had been gathering its fundamentals to recover, but financial
turmoil in August has deferred the recovery from early to later
2012. Meanwhile, the nonresidential construction category should
get better in the first half of 2012, but will be unstable for a
few quarters before a clear recovery sets in. Public construction
will likely continue to be a drag on the market during 2011 and
2012.
The Wright Express Construction FCI for August 2011 is available
at www.wrightexpress.com/fci.
Index Methodology
The Wright Express Construction Fuel Consumption Index (Wright
Express Construction FCI) was developed by IHS Consulting and
Advisory Services 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, and 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. We found that the greatest insights were 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 August 2011 was
0.897 for total construction put-in-place and 0.894 for
construction employment.
Indicator Correlation Total
Construction Put-in-Place 0.897 New Single-Family Homes for
Sale 0.897 Construction Employment 0.894 New Single-Family Homes
for Sale - Under Construction 0.872 Total Private Housing Under
Construction 0.868 S&P/Case-Shiller Home Price Index -
Composite 20 Index 0.831 Average Sales Price of Existing
Single-Family Homes Sold 0.819 Residential Construction
Put-in-Place 0.759 Total Housing Completions, Private 0.739 New
Single-Family Homes Sold - Completed 0.723 Average Sales Price of
New Single-Family Homes Sold 0.693 Median Sales Price of New
Single-Family Homes Sold 0.666 Total Private Housing Starts 0.536
New Single-Family Homes Sold 0.531 Housing Permits, Private 0.528
Nonresidential Construction Put-in-Place 0.451 New Single-Family
Homes Sold - Under Construction 0.283
About Wright Express
Wright Express Corporation (NYSE: WXS) is an international
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
wrightexpress.com.
About IHS
IHS (NYSE: IHS) is the leading source of information and insight
in critical areas that shape today’s business landscape, including
energy and power; design and supply chain; defense, risk and
security; environmental, health and safety (EHS) and
sustainability; country and industry forecasting; and commodities,
pricing and cost. Businesses and governments in more than 165
countries around the globe rely on the comprehensive content,
expert independent analysis and flexible delivery methods of IHS to
make high-impact decisions and develop strategies with speed and
confidence. IHS has been in business since 1959 and became a
publicly traded company on the New York Stock Exchange in 2005.
Headquartered in Englewood, Colorado, USA, IHS employs more than
5,100 people in more than 30 countries around the world.
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