The Building Tradesman Newspaper

Friday, May 01, 2015

Michigan construction enjoying a resurgence

By The Building Tradesman

Michigan's construction industry, so far, is thoroughly enjoying 2015.

Our state was ranked No. 4 nationwide in construction industry job gains in March 2015 vs. March 2014, up 10.4 percent or 14,400 jobs. The only states outpacing Michigan percentage-wise were Idaho, North Dakota, Washington and Colorado.

Near-term, the news was also good for Michigan, which gained 1,100 jobs in March 2015 compared to the month prior. However, employment dropped during that time in 29 states. The numbers come from an Associated General Contractors report released April 21.

The AGC cautioned that ongoing Washington D.C. gridlock over how to pay for needed infrastructure improvements and declining demand for oil-related projects likely contributed to so many states shedding construction jobs last month.

"While the year-over-year data remains relatively positive, it is troubling to see so many states (29) losing construction jobs during the past month," said Ken Simonson, the association's chief economist. "As energy firms cancel or delay projects and Congressional action on transportation and other infrastructure measures remains stalled, many construction firms appear to be reducing headcount, at least temporarily."

Losing the highest percentage of jobs during that 12-month period were West Virginia (-7.2 percent) and Mississippi (-4.7 percent).

The AGC urged Congress and the Obama administration to act quickly to figure out a way to pay for and pass legislation to repair aging roads, bridges and transit systems, as well as other public infrastructure. "The construction industry has clearly hit a soft patch," said Stephen E. Sandherr, the association's chief executive officer. "Passing needed infrastructure measures will certainly help keep construction employment levels from backsliding."

The pullback of U.S. construction was confirmed in an April 21 report by Dodge Data and Analytics, which said new construction starts in March retreated 13 percent compared to strong gains in January and February. Although overall, Dodge said construction starts gained 13 percent in March 2015 compared to March 2014.

“The presence of unusually large projects will affect the month-to-month pattern for construction starts, and that’s certainly been true during the early months of 2015,” stated Robert A. Murray, chief economist for Dodge Data & Analytics.  “The elevated activity in February exceeded the underlying trend for construction starts, and the March pullback returns activity to a more sustainable pace, at the same time showing an industry that’s still in the midst of expansion.

"While nonresidential building lost some momentum in March, the broad pattern over recent months reveals more growth for commercial building combined with strengthening for several institutional structure types, most notably school construction.  Although there’s concern that public works construction will be dampened by the uncertainty caused by the soon-to-expire federal transportation legislation, a healthy amount of highway and bridge work has reached the construction start stage so far in 2015."

He said while single-family housing construction is still slow, "the multifamily side of the housing market continues to strengthen, as low vacancies and rising rents in numerous markets provide the justification for more construction.”