The Building Tradesman Newspaper

Friday, December 10, 2010

Industry still not ready to awaken from construction’s ‘long nightmare’

By The Building Tradesman

U.S. Census Bureau figures and analysis by McGraw Hill Construction both reported small jumps in U.S. construction activity in October. But no one is ready to state that construction industry is ready to bust a positive move forward.

“This year’s pattern shows activity fluctuating within a set range, consistent with the belief that construction starts have now stabilized at a low level,” said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction. “At the same time, there’s yet to be evidence that renewed expansion on a sustained basis is about to take hold.”

On Dec. 1, Ken Simonson, chief economist for the Associated General Contractors of America, said: “Without any upward trend in key private-sector construction components like homes and office buildings, it is hard to feel optimistic about the near future. With public construction at risk of cutbacks, it is premature to conclude that construction has awakened from its long nightmare.”

The Census Bureau reported on Nov. 23 that October construction rose 0.7 percent. McGraw Hill reported a higher 2 percent increase from September to October, but said through the first ten months of 2010, total U.S. construction came in at $350.4 billion, down 3 percent from the same period a year ago.

The AGC said 29 states added construction jobs from September to October – and Michigan was one of them, putting 1,200 more Hardhats to work. However, Michigan lost 5 percent of its construction jobs from October 2009 to October 2010. That ranked our state at #34 in construction job gains (or losses) during that period.

Kansas (#1) saw a 9 percent gain in construction employment during that 12-month period, while Nevada (#50) saw Hardhat employment drop by 19.5 percent. Numerically, California lost the most jobs during that 12-month period: 45,700 jobs.

“Considering that most states adding construction jobs in October had shed workers in September , it is safe to say that construction employment remains volatile,” Simonson said. “Construction is no longer in free fall, but the industry remains fragile as improvements vary greatly by state and project type.”

McGraw Hill reported that single-family housing in October edged up 1 percent, while nonresidential building dropped 9 percent. Non-building construction (public works) in the U.S. increased 14 percent in October, making a partial rebound after the 27 percent decline reported for September . Electric utility construction was particularly strong in October, climbing 31 percent, helped by wind farm work.

“The emerging recovery for housing has proven to be halting, and commercial building is still in the process of bottoming out,” Murray said. “While public works in 2010 has moved at a decent clip, its prospects for 2011 are less favorable, given fading stimulus support and the fact that Congress has yet to pass the appropriations bills for fiscal 2011.”