Construction industry’s outlook is mixed

The economic outlook for construction in 2003 is mixed, with the uncertainties of the recession and a possible war in Iraq dampening optimistic hopes. However, a new poll conducted by Manpower, Inc., predicts that the construction industry will remain among the top 10 in new staffing for 2003.

While news of a stale economy is widespread, statistics for construction show that the industry isn’t really as bad off as originally thought. According to the Associated General Contractors, construction employment for the year increased in 22 states, had no change in 8, and decreased in 20 states, plus D.C. Although this was an increase from 2001, 91,000 jobs were lost from December 2001 to December 2002.

What does this mean for the next year? The construction industry might do better than other sectors of the economy. In a poll conducted by Manpower, 16 percent of construction firms plan to hire during the first three months of this year, a time when building is usually slow. The states expected to do best during the winter months will most likely include southern states, where the weather is more permitting, with construction lagging in the northeast during the frigid months.

According to AGC chief economist Kenneth Simonson, the need for jobs in the construction industry will probably stay the same as 2002, with the single family housing doing the best.

“In 2002, single family housing had a record year,” Simonson said. “That record volume will probably continue in 2003.”

Sales of new single-family homes set a record in 2003, with the total at 976,000, 7 percent above the 2001 total and the highest in the 40-year history of the tally, according to Simonson.

Employment in other areas of construction were more mixed, with general building contractor employment up by 1.2 percent, heavy, non-building construction down by 4.9 percent and special trade contractors down by 1.5 percent. The public construction sector was also mixed, with most of the highway and street construction occurring in educational construction, which went up 14 percent. Conservation and development construction went up 9 percent, and sewer systems went up 7 percent.

According to the AGC, increased construction in the residential sector is good for a variety of other, nonresidential contractors as well. As new and existing housing construction increases, it will require grading, paving and utility contractors.

As for the effect that a conflict with Iraq would have on construction, it would probably hit in two areas, according to Simonson: spending and the workforce. A war will most likely influence a decrease in spending, which could halt new building activity. Groups of reservists are already being called for duty, which affects the workforce heavily. According to the AGC, construction employs a disproportionate share of reservists, in comparison to other industries.