Earlier this year, I blogged about the four-state region's 2011 construction forecast, courtesy of information from McGraw-Hill Construction, publisher of ENR Southeast. At that time, McGraw-Hill Construction was predicting some fairly rosy scenarios for the Southeast.
The company projected the volume of Florida's construction contracts to grow by 9% overall, for example. The optimism expressed for the Sunshine State was mild compared to the 40% and 43% overall gains predicted for Georgia and South Carolina, respectively. North Carolina, on the other hand, was in line for a 2% decline in 2011.
So far, reality isn't matching up with these predictions. Instead, through the first quarter of 2011, three of the four Southeast states are down significantly, and the fourth is off slightly compared to last year's pace, according to McGraw-Hill Construction.
State-by-state, it's not pretty. The biggest of the Southeast states, Florida, is 29% behind the early pace of 2010, with about $5.1 billion in new contracts through the first three months of the year. It could've been worse, as both January and February saw 50% declines in monthly contracts. A 35% overall jump in March improved the numbers from merely horrible to just plain bad.
It gets worse. Thanks to a 36% overall decline in the value of its March contracts, Georgia is now 30% behind its first-quarter pace of 2010, with nearly $2.2 billion in new contracts so far this year. And North Carolina, fresh off a 52% nosedive in March, is now 34% behind 2010, with nearly $2.8 billion in new contracts.
South Carolina seems like a relative model of consistent construction contract activity. Its year-to-date total of about $1.8 billion in new contracts is only 7% lower than a year ago, for instance.
In the three states reporting the greatest declines--Florida, Georgia and North Carolina--the nonresidential and nonbuilding categories are faring the worst. In Florida, nonresidential contracts are down 40% on a year-to-date basis, while in Georgia, this sector is down 35%, and in North Carolina it's off by 37%. (In South Carolina, nonres contracts are up 59% compared to last year.)
Nonbuilding contracts--the term McGraw-Hill Construction uses for infrastructure and civil projects--are down by 35% in Florida through the first quarter, while Georgia's are 49% lower than a year ago, and North Carolina nonbuilding contracts are 47% lower. (The nonbuilding category is also South Carolina's worst-performing sector, with its YTD total 38% lower than 2010.)
Of course, with no more stimulus funds to utilize, many governmental entities, such as transportation departments, are back to where they were a few years ago: facing drastically strapped construction budgets and little hope for much improvement in the years ahead.
Still, these numbers are pretty bad, especially when considering that this is 2011 -- the year the construction industry was supposed to break out of its funk, not go into further steep decline. Forecasts from a range of sources have predicted that the industry had more or less bottomed out, and, generally speaking, the economy would start turning up in 2011, and possibly into 2012. Instead, so far, the Southeast is experiencing declines that could only be honestly described as deeply worrisome at best.
More specifically, the Southeast's early 2011 numbers are significantly lower than the national figures that McGraw-Hill Construction reported recently. Overall, the company reports the value of nationwide construction contract starts at about $88 billion, or 10% behind the same period of a year ago.
The economists aren't panicking yet, but they are taking notice. Jennifer Coskren, an economic analyst with McGraw-Hill Construction, said: "We have become a bit more pessimistic about construction in general. Since the last forecast, we have downgraded some of our national figures, particularly for single-family housing and public works."
Moreover, Coskren reminded, it is early still, and big contracts can produce big swings in these numbers. The recently awarded $668-million contract to build a waste-to-energy facility in Palm Beach County, Fla., is one such example.
Now, for the important questions: What do you think about how 2011 is progressing so far? Do you agree or disagree with the latest figures? Is your company finding more or fewer opportunities than a year ago? Have you revised your own expectations?
Let us hear your thoughts!