Real (net of inflation) gross domestic product (GDP) tumbled 6.1% in the first quarter at a seasonally adjusted annual rate, following a 6.3% decline in the fourth quarter of 2008, the Bureau of Economic Analysis reported today. Real investment in "nonresidential structures decreased 44%, compared with a decrease of 9.4%....Real residential fixed investment decreased 38%, compared with a decrease of 23%." Real investment in government structures shrank 17%, compared to -7.7%. Among major nonresidential types, real investment in commercial and healthcare structures fell 33% and 22%; manufacturing rose 42% and 10.5%; power and communications, -35% and -2%; and other, -32% and -17%. The price index for GDP fell 1.0% and 4.3%. The price index for investment in private nonresidential structures fell for the first time since 2003, dropping 3.4%, after rising 7.4%. The price index for residential investment fell for the fifth straight quarter, dropping 4.8%, compared to -9.4%." The price index for government structures rose 4.4% and 10.3%.
In the first quarter of 2009, the hotel-construction tracking firm Lodging Econometrics (LE) reported on Monday, "the US Construction Pipeline decelerated rapidly and now stands at 4,918 projects/619,431 rooms. Compared to the Pipeline peak in Q2 2008, this is a drop of 16% by projects and 21% by rooms, a substantial fall-off for a three-quarter period....While selected smaller projects are still able to locate financing under stringent terms, larger-scale construction cannot. As a result, numerous projects are stalled in the pipeline as developers struggle with credit difficulties and the changing operating environment. Accelerating project cancellations are now reaching the highest level LE has ever recorded. New Project Announcements into the Pipeline are trending further downward. Those projects seeded in the pipeline at mid-decade and already financed are now opening at an increased speed. New supply additions will reach a cyclical peak in 2009 and then taper off beginning in 2010....At Q1, there were 1,446 projects/192,448 rooms Under Construction, a drop of 22% and 21% respectively from the Q2 2008 peak....Projects Scheduled to Start Construction in the Next 12 Months have declined precipitously from the Q2 2008 peak, down 23% by projects and 29% by rooms. The slump is a result of the rise in Cancellations and Postponements, which is expected to continue. At 2,108 projects/232,949 rooms or 43% and 39% of the Total Pipeline, respectively, Scheduled Starts show a large backup of projects that lack the financing to start construction."
"After already cutting $40 billion, states expect to have to slice another $62 billion to make their current budgets balance, the National Conference of State Legislatures [NCSL] said in its latest survey of states' fiscal health, released April 23," the online newsletter Stateline.org reported on Friday. "Four months ago, NCSL figured states would have to close shortfalls of $85 billion for fiscal 2010 budgets. Now that number has ballooned to $121 billion."
The American Institute of Architects reported on Friday that its Architecture Billings Index (ABI) improved significantly in March, rising to its highest level since August 2008 with a score of 44. An ABI of 50 means equal numbers of architecture firms reported rising and falling billings. "Firms with an institutional specialization also continued to bounce back in March with a score of 43 (with declines slowing from an all-time low of 38 in January). This was the last sector to report a slowdown, and it is now rebounding the fastest. Business conditions also appear to be improving slightly for firms with a residential focus but are weak and unchanged from last month for firms with a commercial/industrial specialization."
"State unemployment rates were nearly all higher in March," the Bureau of Labor Statistics (BLS) reported on April 17, as 46 states recorded over-the-month unemployment rate increases, North Dakota and the District of Columbia registered decreases, and Georgia, New York and Rhode Island had no change. Over the year, jobless rates were up everywhere. In March 2009, nonfarm payroll employment decreased in 48 states and DC and rose slightly in Alaska and Louisiana. Construction employment rose by less than 1% in March in New Jersey, New Hampshire and Vermont, and fell everywhere else. Compared to March 2008, construction employment rose only in Louisiana, by 5%, and fell everywhere else. The largest year-over-year declines were in Arizona, -28%; Connecticut, -22%; Florida, -21%; Vermont, North Carolina and Oregon, -19% each.
Unemployment rates were higher in March than a year earlier in all 372 metropolitan areas, BLS reported today. Among the 310 metropolitan areas for which nonfarm payroll data were available, 282 areas reported over-the-year declines in employment, 22 reported increases, and 6 had no change. The largest over-the-year percentage decreases in employment occurred in Elkhart-Goshen, Indiana, -12.9%, Cape Coral-Fort Myers, Florida, -9.7%, Yuma, Arizona, -9.5%, and Dalton, Georgia, -8.6%. The largest over-the-year percentage gains were experienced in Odessa, Texas, 3.4%, Midland, Texas, 2.3%, and Grand Junction, Colorado, 2.0%. Rising employment can suggest construction opportunities.
The national mover rate declined from 13.2% in 2007 to 11.9% in 2008, the Census Bureau reported on April 22, adding that the rate was "the lowest...since the bureau began tracking these data in 1948. In 2008, 35.2 million people 1 year and older changed residences in the U.S. within the past year, [down] from 38.7 million in 2007 and the smallest number of residents to move since 1962. Lower mobility is a bad sign for construction in areas that depend on immigration.
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