Two recent reports by the Associated General Contractors of America outline the challenges still to come as the construction industry climbs out of its economic hole of the past couple of years.
With an analysis based on Census Bureau data, the AGC concluded in a report released yesterday that construction spending fell 2.5% in December to a $788 billion seasonally adjusted annual rate, the lowest level in a decade. Drops occurred in all three major components – private residential, private nonresidential and public construction.
“These dismal results…show that the agony of the recession continues for millions of construction workers and their firms,” says Ken Simonson, the association’s chief economist.
Of the few positive sectors, the strongest was power construction, 13% higher than in December 2009, due to new power plants, solar and wind generation and transmission lines, all expected to stay strong in 2011, according to Simonson. Highway construction was up 7.6% from last year, but dropped 1.6% since last month.
“The outlook for 2011 is very mixed,” Simonson says in the report. “Spending on rental housing, warehouses, hospitals and factories should pick up. Power construction should stay strong, and federal dollars for stimulus and base realignment or ‘BRAC’ projects will continue to sustain some contractors. But public school construction and other state and local projects will keep shrinking, while single-family homebuilding, retail and office construction are likely to remain feeble.”
The report’s mixed outlook mirrors a survey of contracting firms published last week by the AGC and Navigant Consulting. The survey shows that Arizona contracting firms only expect a single sector – power – to improve in 2011. Manufacturing is expected by most Arizona respondents to stay flat with 2010, but other sectors, such as retail, will have less dollar volume in the eyes of as many as 73% of those surveyed.
Of the 62% of respondents that laid off workers in 2010, the average loss was 61 workers. Twenty percent of firms added personnel in 2010. The outlook for 2011 is better, but still not positive, with 32% of firms expecting additional layoffs and 27% looking to hire.
Another interesting statistic: more than half of the Arizona respondents, 56%, received at least one stimulus-funded construction contract in 2010. And of those, 22% saw more than three quarters of their entire staff involved in stimulus-funded projects.
Asked when the industry would turn around, not a single Arizona respondent thought that it would occur in 2011, while 41% said 2012; 35% said 2013 and 24% said 2014.See the full results for Arizona here, with additional info on the use of BIM, equipment purchases, lean construction and more.
With an analysis based on Census Bureau data, the AGC concluded in a report released yesterday that construction spending fell 2.5% in December to a $788 billion seasonally adjusted annual rate, the lowest level in a decade. Drops occurred in all three major components – private residential, private nonresidential and public construction.
“These dismal results…show that the agony of the recession continues for millions of construction workers and their firms,” says Ken Simonson, the association’s chief economist.
Of the few positive sectors, the strongest was power construction, 13% higher than in December 2009, due to new power plants, solar and wind generation and transmission lines, all expected to stay strong in 2011, according to Simonson. Highway construction was up 7.6% from last year, but dropped 1.6% since last month.
“The outlook for 2011 is very mixed,” Simonson says in the report. “Spending on rental housing, warehouses, hospitals and factories should pick up. Power construction should stay strong, and federal dollars for stimulus and base realignment or ‘BRAC’ projects will continue to sustain some contractors. But public school construction and other state and local projects will keep shrinking, while single-family homebuilding, retail and office construction are likely to remain feeble.”
The report’s mixed outlook mirrors a survey of contracting firms published last week by the AGC and Navigant Consulting. The survey shows that Arizona contracting firms only expect a single sector – power – to improve in 2011. Manufacturing is expected by most Arizona respondents to stay flat with 2010, but other sectors, such as retail, will have less dollar volume in the eyes of as many as 73% of those surveyed.
Of the 62% of respondents that laid off workers in 2010, the average loss was 61 workers. Twenty percent of firms added personnel in 2010. The outlook for 2011 is better, but still not positive, with 32% of firms expecting additional layoffs and 27% looking to hire.
Another interesting statistic: more than half of the Arizona respondents, 56%, received at least one stimulus-funded construction contract in 2010. And of those, 22% saw more than three quarters of their entire staff involved in stimulus-funded projects.
Asked when the industry would turn around, not a single Arizona respondent thought that it would occur in 2011, while 41% said 2012; 35% said 2013 and 24% said 2014.See the full results for Arizona here, with additional info on the use of BIM, equipment purchases, lean construction and more.
Similar results can be found in the Nevada survey, where respondents felt no sector would improve in 2011, and New Mexico, where the majority of those surveyed felt hospitals and higher education would improve this year.
What’s your take? Where does your firm stand in its outlook for 2011? If you already participated in the AGC’s survey, have you seen any changes to your outlook since the interview was conducted? Please comment below.
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