News Details

U.S. Construction Industry Activity Up 0.2% in December vs. Previous Month

SOUTH PORTLAND, Maine--(BUSINESS WIRE)--Jan. 25, 2012-- Wright Express Corporation (NYSE: WXS), 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 0.2% in December versus the previous month.

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 December 2011, the Wright Express Construction FCI reported that fuel consumption by U.S. construction companies rose by 0.2% versus the previous month, and decreased by 3.2% versus December 2010.

"The analysis of the December 2011 FCI data shows mild improvement for the construction industry,” said Michael Dubyak, chairman and chief executive officer of Wright Express. “There were 17,000 nonresidential sector jobs added in December, and total construction put-in-place expanded 1.2% in November, with public construction spending growing by 2.0%.”

The Wright Express Construction FCI, which is available monthly in advance of the U.S. Census Bureau figures on construction spending, is available at www.wrightexpress.com/fci.

December 2011 Wright Express Construction Fuel Consumption Index (FCI)

According to the Wright Express Construction FCI, December was the first time the index had a year-over-year loss in 2011, which can mostly be attributed to the uncharacteristically strong performance of the index in December 2010. Additionally, while continued infrastructure spending growth is likely unsustainable as state and local governments are faced with budgetary problems, it increased by 2.5% in November.

IHS Analysis

According to the IHS analysis, the December result of the Wright Express Construction Fuel Consumption Index reflects a stalled construction recovery. Throughout 2011, monthly gains and losses have been modest. This year is expected to be better than last for housing with pent-up demand building as young adults stay at home, and at some point will spark a major revival in housing activity. Initially, the revival will take place in the multi-family segment, while the single-family segment will post more modest gains.

The Wright Express Construction FCI for December 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 Global Insight 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 Global Insight with input from Wright Express. The sample included only accounts that had been active for at least two years. In this way, IHS Global Insight 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 Global Insight 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. 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 December 2011 was 0.898 for the number of new single-family homes for sales and 0.889 for total construction put-in-place.

About Wright Express

Wright Express Corporation (NYSE: WXS) 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 wrightexpress.com.

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Source: Wright Express Corporation

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