Despite the headline-grabbing attention of federal deficits and budget cuts, the real problems facing construction remain the prolonged recession in the private nonresidential building markets, the weakening of the once-dependable public markets, a stalled housing recovery teetering on the brink of slipping back into recession and high unemployment. That does not add up to a quick recovery, which in turns equals low inflation abetted by desperate bidding. The sudden turnaround from the Keynesian economics of stimulus to the Hoover-era economics of austerity only make the outlook bleaker. Related Links: Confidence Survey: Top Industry Execs Believe the Market Has Turned a
With optimism surrounding a market upswing, contractors seem to be willing to offer higher compensation to talented top-level executives as a strategic way to adapt to new markets and draw in new business. Related Links: Economics: Japan Quake Won�t Shake Up Costs as Recession Trumps Rising Prices Confidence Survey: Top Industry Execs Believe the Market Has Turned a Corner Bidding: Price Escalations May Lead Aggressive Bidders To Default Asphalt: Weak Demand vs High Oil Prices Internet: Finding Cost Data on ENR.com: Cost Indexes, Wages and Prices Methodology: As the Construction Recovery Stalls, What Is the Impact on Inflation? Indexes: How
Construction's February unemployment rate of 21.8% showed improvement over January's 22.5% rate and was a substantial drop from February 2010's 27.1%. Related Links: Bureau of Labor Statistics Release Analysis From Associated General Contractors of America Analysis From Associated Builders & Contractors The Bureau of Labor Statistics latest monthly employment snapshot, released on March 4, reports that construction gained 33,000 jobs last month. But the bureau also note that the industry's February gain followed a loss of 22,000 jobs in January, which it says "may have reflected severe winter weather." Construction's 21.8% jobless rate also remains the worst among major U.S.
+ Image Chart: Justin Reynolds, Data From PCA Cement production in the U.S. leveled off in 2010 after steep declines in 2009, says the Portland Cement Association, Skokie, Ill. Total cement production, including output from imported clinker, declined 24% in 2009. That dip was followed by another 0.5% decline in 2010, with production falling to 63.75 million tons. Regionally, the largest declines in 2010 were a 9.2% drop in New England and a 7.2% drop on the West Coast, including a 7.0% dip in California and an 8.1% total decline in Oregon and Washington. Production also fell 6.7% in the
+ Image Construction markets are off to a slow start in 2011 after falling 2% last year, according to McGraw-Hill Construction’s estimates for the dollar value of new construction starts in January. MHC estimates that total construction in the first month of the year was running at a seasonally adjusted annual rate of $423.4 billion, or 6% less than January 2010’s pace. The non-residential building market was the most sluggish, falling 13% off last year’s pace, while the homebuilding market was down 7%. “For total construction starts to register growth in 2011, it will require more upward movement from housing
Highways, transit and passenger rail are the big winners among construction programs in President Obama’s $3.7-trillion fiscal 2012 budget request, which calls for sharp increases in those sectors next year, kicking off a proposed $556-billion, six-year surface transportation bill. But many other major construction accounts would suffer cuts under Obama’s plan to help meet his goal of freezing overall non-security-related discretionary funding. Among programs that would be trimmed are Environmental Protection Agency water infrastructure, Army Corps of Engineers civil-works construction and General Services Administration new buildings construction. The Associated General Contractors calculates that the Obama budget seeks a total of
Oregon’s Gov. John Kitzhaber (D) and members of the state Legislature are attempting to create an enormous works program by paving the way for millions of dollars in energy-efficiency retrofits in the state’s public schools. “This is a pretty big, complex project for a small state like Oregon,” says Kitzhaber spokesman Ian Greenfield. “It’s our major jobs package, and it could potentially employ thousands of Oregonians.” The scale of work could be unprecedented, Greenfield said. Kitzhaber’s first act as governor in January was to shift $2 million in unused American Recovery and Reinvestment Act funds to conduct energy audits on
Contractors see some encouraging market signals for 2011, but they still believe it will be a tough year, according to a survey by the Associated General Contractors. AGC’s member survey, released on Jan. 24, received about 1,300 responses. It showed that, despite predictions of slight growth in demand for several key sectors and an improving employment picture, construction firms are bracing for at least one more difficult year. Fading stimulus spending and overall weak demand will limit the rebound. “While there are some promising and positive signs in the outlook, the bottom line is 2011 will not be an easy
MADIGAN Illinois Attorney General Lisa Madigan has filed a motion with the Illinois Supreme Court seeking to stay a lower-court ruling that would halt the state’s multi-year $31-billion public-works program. The controversy could imperil transportation, school and other construction projects throughout the state. A Jan. 26 appellate court decision found the state’s 2009 capital bill unconstitutional, ruling it violated a “single subject” clause of the state constitution. The bill called for supporting public-works projects with tax hikes on liquor, candy and video gambling as well as an increase in license-plate sticker fees. Both Democratic and Republican lawmakers supported the measure
McGraw-Hill Construction has compiled its initial tally for construction starts during 2010 and estimates that the total dollar value of all starts declined 2% to $412 billion. The non-residential building market was down 9%, while the heavy and highway markets were down 1%, despite massive federal stimulus spending on those markets. “The pace of contracting has stabilized after the steep correction of prior years, although renewed expansion for total construction has yet to take hold,” says MHC’s chief economist Robert Murray. The commercial market declined 17%, a relative improvement over 2009’s 43% decline. Other commercial markets were harder-hit, including year-to-year