Despite a modest uptick in December, new construction starts for the year were the lowest in 40 years
By Ken Simonson
McGraw-Hill Construction (MHC) www.construction.com reports that new construction starts rose five percent in December, seasonally adjusted, based on data it compiled. But, for all of 2009, “the 26 percent annual decline for construction starts was the steepest in at least the past 40 years,” Robert Murray, Vice President of economic affairs for MHC, said. “At the same time, the bottom for construction starts was reached in February, to be followed by an up-and-down pattern during 2009 which suggests that the transition has been made from steady decline to at least low-level stability.
“Funding from the federal stimulus bill helped to produce gains for highways and bridges, as well as a pickup for a few project types such as courthouses. However, commercial building and multifamily housing registered particularly severe declines in 2009, and even the previously resilient institutional building sector lost momentum. Going into 2010, more improvement is expected for housing and public works, but commercial and institutional building will continue to be adversely affected by weak employment, tight bank lending, and the eroding fiscal health of states and localities,” he noted.
MHC said nonresidential building starts were unchanged in December but fell 33 percent for 2009 as a whole. Residential building in December “edged up 1 percent” but tumbled 31 percent for the year. Nonbuilding construction climbed 15 percent in December but slid 9 percent for the year,
Construction employment fell in December in 40 states, rose in six and was unchanged in four plus D.C. For the first time since the recession began in 2007, employment fell everywhere compared to a year earlier. The largest 12-month percentage declines were in Nevada, -28 percent; Wyoming, -24 percent; Tennessee and Montana, -20 percent. The smallest declines were in Louisiana, D.C., Oklahoma and West Virginia, -4 percent.
“In 2009, the union membership rate—the percent of wage and salary workers who were members of a union—was 12.3 percent, essentially unchanged from 12.4 percent a year earlier,” the Bureau of Labor Statistics (BLS) www.bls.gov reported on Friday. Private-sector industries with high unionization rates included construction (14.5 percent, representing 958,000 workers out of 6,613,000). In 2008, 15.6 percent, or 1,195,000 of 7,652,000 employees in construction, were union members. Thus, from 2008 to 2009, overall construction employment fell by 1,039,000 (14 percent) and union employment by 237,000 (20 percent). Wages averaged $744 per week in construction; $1,072 for union members and $698 for nonmembers. Overall wages rose 4.5 percent from $712 in 2008. Union wages rose 5.7 percent from $1,014; nonunion wages rose 4.5 percent from $668. The increases reflect heavier layoffs among lower-paid workers as well as actual increases.
Consulting firm Lodging Econometrics www.lodgingeconometrics.com predicted on Monday, “just 717 hotels, representing 82,620 rooms, will open in 2010. This is a 56 percent drop from 2009….LE’s forecasted declines for 2010 represent a steep drop-off from earlier forecasts and are a result of the near-disappearance of lending. [The 767] projects under construction [95,900 rooms in the fourth quarter] are the lowest level recorded in over four years and are expected to continue to fall throughout 2010….construction starts [119 projects/11,623 rooms, are] the lowest totals since early 2002….Project cancellations and postponements remain at historical highs. Meanwhile, new project announcements have fallen to five-year lows.”
Edited by Kevin Doyle
The Data DIGest is a weekly summary of economic news compiled by Ken Simonson, the Chief Economist of The Associated General Contractors of America (AGC) www.agc.org
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