The dollar value of construction starts during the first half of this year was $195 billion, or 36% less than the same period a year ago, according to McGraw-Hill Construction. The residential market continues to be a drag, showing a 46% decline from last year’s already depressed market. However, the nonresidential building market also is in a steep decline, falling 41% below 2008’s first-half total. “Non-residential building, hampered by the weak economy and tight bank lending, would see further erosion,” says Robert Murray, chief economist for MHC. “On the plus side, the boost to public works from the federal stimulus
Single-family housing permits increased 5.9% in June to an annual rate of 430,000 units, with permits increasing in the South and West and remaining unchanged in the Northeast and Midwest, according to the U.S. Dept. of Commerce. Multifamily permits improved for the first time in 11 months after sinking to an all-time low in May, according to Commerce. “This was the most positive housing report in ages,” says Patrick Newport, an economist with IHS Global Insight, Lexington, Mass. “Based on June’s numbers, we should continue to see improving housing starts nationally and across all regions over the next two months,”
The entire economy is reeling from the recession, but construction particularly has been hit hard. In June, the total construction unemployment rate was 17.4%, according to the Bureau of Labor Statistics. By comparison, the unemployment rate for the overall economy was 10%. Both numbers are not seasonally adjusted. Construction employment rose only in North Dakota and Louisiana, up 5% and 4%, respectively. Jobs disappeared at an alarming rate in the remaining 48 states, including year-to-year declines of 26% in Arizona, 23% in Nevada, 22% in Connecticut and 20% in Tennessee, according to BLS. The impact of federal stimulus spending is
The industry is in the midst of its worst recession in a generation, and most major firms worry the market will not come out of its slump any time soon. However, the latest ENR Construction Industry Confidence Index shows industry leaders are beginning to see some light at the end of the tunnel. + Image How different groups view the market The ENR Construction Industry Confidence Index was launched in April, when the market looked its bleakest. At that time, executives from 752 large contractors, design firms, specialty firms and subcontractors, and construction-management firms saw little about which to be
Infrastructure spending is expected to decline 4.3% in 2009 despite the federal stimulus boost, says market analyst IHS Global Insight, Lexington, Mass. It attributes the projected falloff to state deficits and municipal funding shortfalls. The analysis projects a spending decline of 1.6% in 2010 and then a 2.4% increase the next year “as tax receipts improve and the federal stimulus is fully implemented.” IHS Global Insight projects power spending will increase by 1% this year but that “slumping demand” will reduce sector spending by 16% in 2010. Related Links: IHS Q2 Infrastructure Spending Market Analysis IHS Q2 Infrastructure Spending Press
State departments of transportation have passed their first “use it or lose it” test under the American Recovery and Reinvestment Act, obligating half of their highway stimulus funds at least 10 days before the June 29 deadline set under the economic-stimulus statute. In another positive sign, the number of ARRA highway and transit project starts has climbed sharply, but critics point out that actual outlays remain small. ARRA required states to obligate—commit to specific projects—at least 50% of their highway stimulus allocations by June 29. If not, the unobligated portions would revert to U.S. DOT to be redistributed to other
Construction costs took a major hit during the second quarter, with 14 of the 15 industry cost indexes tracked by ENR declining from the previous quarter. They were some of the biggest quarter-to-quarter declines ever recorded by ENR, averaging a 1.4% decline between January and April of this year. Photo: Michael Moore / SME Steel Contractors Prices for reinforcing bar tumbled by more than half over the past year. Related Links: Razor-Thin Margins As Contractors Fight For Stimulus Projects Firms Hold the Line on Raises, But Salaries Remain Competitive Slow Payment Is Sapping Contractors Strength A Strong Market Still Has
The current recession is turning out to be severe, and Florida, with its dependence on housing, is particularly vulnerable. The most immediate help to the Florida economy will come from the federal stimulus bill. The American Recovery and Reinvestment Act of 2009 (ARRA) has a price tag estimated at $787 billion. The Florida Office of Economic Recovery estimates about $14.1 billion of these funds will flow into the state. + Image Florida's Share of Federal Stimulus Funds Most of the funds from the stimulus bill will go toward staving off education budget cuts, extending unemployment benefits and buttressing the state’s
Despite skyrocketing construction unemployment, most companies are trying to hold steady on compensation to retain existing talent and stay competitive during the recession. Although many firms are trying to keep raises in line with cost-of-living increases, others are freezing salaries. Nearly 20% of respondents to a survey conducted by construction-compensation consulting firm PAS Inc. say they would not increase salaries this year, but only 1% say they would reduce them. Related Links: Razor-Thin Margins As Contractors Fight For Stimulus Projects Costs Post Rare Quarterly Decline Slow Payment Is Sapping Contractors Strength A Strong Market Still Has High Risks Complete 2nd
On top of concerns about dwindling backlogs and an uncertain economic outlook, slow payment for work already performed is now sapping the strength of many industry firms. Across the industry, executives report pay cycles for general contractors have stretched to an average of 45 to 60 days from 30 days a year ago. Subcontractors report pay cycles in the 90-day range, roughly twice the average from a year ago. Related Links: Razor-Thin Margins As Contractors Fight For Stimulus Projects Costs Post Rare Quarterly Decline Firms Hold the Line on Raises, But Salaries Remain Competitive A Strong Market Still Has High
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