Revised forecast: construction down
Overall construction starts for 2009 are estimated to drop to $463.1 billion, or down 15 percent compared to a year ago.

“The construction industry is facing divergent forces in 2009,” said Robert Murray, vice president of economic affairs, McGraw-Hill Construction. “The economy has weakened substantially, and despite all the efforts last fall directed at thawing frozen credit markets, there’s yet to be any sign that lending conditions for construction have improved. On the plus side, the federal stimulus bill is now in place, which will provide quick support to public works this year.”

A revised construction outlook issued by McGraw-Hill on April 2 said the American Recovery and Reinvestment Act of 2008 will grow public works construction by 10 percent in 2009, including 15 percent for highways and bridges. Without the stimulus funds, it’s expected that public works funding in 2009 would have dropped 10 percent.

The rest of the forecast by McGraw-Hill is fairly grim:

• Commercial building in 2009 will drop 27%, steeper than the 17% slide reported last year. The tight lending environment has made it extremely difficult to obtain project financing, leading to more projects being deferred or cancelled, McGraw-Hill said. All commercial project types will register declines in 2009, with the most severe decline anticipated for hotel construction.
• Residential building in 2009 will drop an additional 31%, continuing the downward trend that’s been under-way since 2006. Similar declines are expected for single family housing (down 30%) and multifamily housing (down 31%). Steps taken in early 2009 to address the foreclosure problem should help to ease the rate of descent for housing as 2009 progresses, McGraw-Hill said.
• Institutional building in 2009 will retreat 6%. The stimulus funding will provide a lift to military facilities and energy upgrades for federal buildings, which will moderate this year’s overall institutional decline.

The Bureau of Labor Statistics reported that construction lost 126,000 jobs in March, seasonally adjusted, and 928,000 jobs over the past 12 months. Even though construction accounts for only 5 percent of the workforce, construction layoffs now account for almost 20 percent of total job losses this past year.