Economist predicts relief for struggling construction industry

Contractors and others in the suffering construction industry can expect some relief in the next couple years.

Ken Simonson, the chief economist for the Associated General Contractors of America, spoke to about 60 association members and non-members at SpringHill Suites by Marriott on Thursday about the forecast of business and employment in construction and the benefits of the federal economic stimulus package.

He said the association helped shape and pass the $787 billion package, which allocated about $140 billion to construction and related fields.

“It’s not going to be enough to bail out construction right away,” he said, “but it’s a start.”

The package’s tax provisions benefited small businesses by cutting back on operating costs and allowing them immediately to write off the cost of equipment.

Overall construction dropped 9 percent in the past year, Simonson quoted from a U.S. Census Bureau report. Private residential construction declined by 28 percent.

Port St. Lucie was the nation’s fastest-growing city four years ago, but now fewer people are moving to the state. Simonson predicted residential building will be back by the end of the year and increase next year.

“We’re going to see quite an upturn in sales in homes,” he said.

Last year was one of the best years for nonresidential construction, Simmonson said. He predicted a nonresidential decrease of 3 to 9 percent.

“The trend is to get steadily weaker this year,” he said.

He said to watch the power sector because building power plants should increase, as well as wind and solar plants.

Unemployment hit the construction industry hard. The national 11 percent drop in construction employment meant one out of nine construction jobs disappeared in the past year. The state’s 16 percent decline meant one out of six construction jobs were lost.

Simonson also noted the steep decline in construction costs of materials and components in the last four months. The cost of diesel fuel is the lowest it’s been in more than four years and asphalt and steel mill products remain at low levels. Possible cost increases face copper, concrete and other materials.