Sunday, May 5, 2013

Bad News Dogs Chicago and Illinois Construction Markets

Non residential construction in Illinois fell nearly 30% year over year from the first quarter of 2012 to the first quarter of 2013, declining from $1 billion to $762 million. The corresponding first quarter plunge in the Chicago metropolitan market for non residential construction was a less dramatic 12%. Nationwide, the news for our industry was somewhat less pessimistic, but not very encouraging. Private residential construction , the only major market segment showing a nationwide gain, was up 0.4% in March. Private non residential construction was down 1.5% nationally, with federal government construction declining a steeper 1.7%, and state and local construction spending skidding 4.2% 

National new single family home construction rose 1.6%, and new single family home sales inched up 1.5%. New multifamily construction gained a mere 0.3%. March housing starts passed the one million mark for the first time in nearly five years. Although national unemployment hit a four year low of 7.5%, construction was the only private industry cutting jobs instead of adding them. Governments at all levels also slashed employment ranks.

Our industry continues to suffer locally and nationally, while the overall American economy expanded a modest 2.5% for the first quarter, comparing favorably with Eurozone unemployment of 12.2% and Greek and Spanish unemployment reaching as high as 27%. 

The Obama administration's April 10 budget request includes some mixed news for the construction economy, including fourteen fold increases in GSA construction and nearly three fold increases in GSA repairs and alterations, and much more modest increases of 5% in military construction, 1.5% in highway construction, and 0.9% for public transit construction. Federal construction budget cuts include 13.4% for airport improvements, 20% for EPA waste water and drinking water revolving funds, and 40% for Department of Agriculture rural drinking and waste water projects.

In the next few months and years, it looks like the driving force in any construction industry growth will be private market residential construction.

blog comments powered by Disqus