Compact, Mini Equipment Offers Low Cost, High Productivity

Keep Up To Date with Thousands of Other Readers.

Our newsletters cover the entire industry and only include the interests that you pick. Sign up and see.

Submit Email
No, Thank You.

CAGC Construction Barometer Shows Bluer Carolina Skies

Tue October 26, 2004 - Southeast Edition
CEG



For the first quarter of 2004, the Carolinas AGC Construction Barometer posted a 1 percent decline from fourth quarter 2003, reflecting a tightening construction labor market and continuing fears of rising construction materials costs. This stability (at 2.92 on a scale of 1-5) reflects generally favorable conditions in the Carolinas commercial construction industry.

The Barometer tracks construction industry conditions by integrating statistical data for each quarter with business perceptions of commercial contractors and industry partners.

The Carolinas construction industry posted a modest gain in employment in the first quarter, bucking the typical seasonal decline in construction labor demand. Increased demand is strongest in the rural regions, indicating that economic recovery is finally beginning to reach these slower-growing areas. This gain was accompanied by continuing strength in the Barometer’’s business and economic trends indicators, with higher construction industry business activity for 2004 reflected in both private sector work and public works projects.

The only dark clouds reflect rising materials costs and labor costs. Contractors report increased uncertainty regarding the magnitude and timing of future materials cost increases. This is driven by increased Pacific Rim construction materials demand, now joined by demand for building materials in the hurricane-ravaged Southeastern United States.

In the Barometer’s financing availability segment, short-term credit availability remains strong within the industry, yet contractors report little appetite for increased borrowing.

The most welcome news is the striking advance in contractor optimism regarding future business conditions in the Carolinas construction economy. While it remains to be seen just how strong the construction industry rebound will be, the long-awaited economic recovery in commercial construction is clearly under way. More importantly, this recovery is expected to gain strength in the last months of 2004 and into 2005.

State vs. State

North Carolina down 1.2 percent to 2.90; South Carolina down 0.4 percent to 2.96.

Labor market differences explain most of the variation in the states’ opposing qualitative (contractor opinion) scores. Tightening labor market conditions, and the fear that construction industry wages will likely rise, are both stronger in the Tar Heel economy.

On the quantitative side (hard data) of the index, the rising level of South Carolina unemployment sent that trend segment down 6.1 percent, while a small decline in North Carolina’s unemployment rate led the same segment up 6.1 percent. This state-to-state deviation is largely explained by the size and diversity of the North Carolina economy in relation to that of South Carolina, and the fact that commercial construction activity in North Carolina was somewhat stronger in the first quarter than in South Carolina.

In both cases, however, contractors anticipate significantly stronger business conditions in commercial construction in the remaining months of 2004. This expectation is somewhat stronger in South Carolina.

Regional Economic Highlights

Heartland North Carolina down 0.2 percent.

Mirroring the overall Barometer, index scores in the Heartland North Carolina region remained virtually unchanged in the first quarter.

Rising construction volume was tempered by expected tightening in the construction industry labor market, significant contractor concern over rising materials costs and equipment costs, and growing contractor worries about disruptions in the building materials supply chain.

Despite these concerns, the strength of economic recovery appears strongest in the Piedmont region, with solid job growth in the general economy, improved contractor expectations for rising construction industry business activity, and strong commercial construction job growth.

Eastern North Carolina down 4.7 percent; Western North Carolina down 0.9 percent.

Both Eastern and Western North Carolina contractors report substantial difficulty (as opposed to modest difficulty in the Heartland) in hiring skilled construction labor in early 2004. This difference is perhaps due to recent job migration patterns, with skilled workers moving from to larger urban areas in search of more active labor markets. This migration pattern should begin to abate in the remaining months of 2004, as eastern and western contractors both report expectations of improved business conditions.

While both the Upstate and Lowcountry expect increased commercial construction activity, Upstate contractors appear much more optimistic about their ability to recruit and hire new employees. As in North Carolina, skilled workers have been migrating toward to urban areas, but this trend is expected to diminish. Look for rising Lowcountry labor costs the remaining months of 2004 and into 2005.