Non-residential contractors finally hear good news

ConstructionWhile there has been a fair amount of good news lately about a rebound in homebuilding in Mississippi and across the U.S., commercial contractors have been waiting impatiently for a little sunshine to come their way.

Perhaps their long wait is over.

“I’m cautiously optimistic,” said C.J. “Buddy” Edens, president of the Mississippi chapter of the Associated Builders and Contractors (ABC). “We are definitely seeing some positive signs in the commercial arena here in Mississippi.”

Far from just a good feeling, Edens has some numbers to back up his position.

According to figures released by the U.S. Department of Commerce, nonresidential spending rose 0.7 percent last February. Total nonresidential spending stood at $575.6 billion, up more than 2.5 percent over February 2012.

This marked a significant turnaround from last January, which saw nonresidential spending fall a full 3.3 percent on a monthly basis. Total spending last January was up a mere 0.8 percent compared to January 2012.

February’s healthier figures came as something of a surprise to industry experts, many of whom forecasted a crippled industry being further impacted by wrangling and stalemate in Washington. That has not happened — at least for now — says ABC chief economist Anirban Basu.

“February was unusual in a number of ways, but perhaps the most interesting was the increase in public nonresidential construction,” Basu said in a statement. “This is a segment that has been slumping for an extended period, and the expectation has been that public nonresidential construction would continue to struggle to acquire momentum due to the impact of the automatic sequestration. However, the impacts of sequestration largely remain in front of us.”

Basu, who called last January’s spending decline “particularly alarming,” echoed Eden’s cautious optimism saying recovery will not be brisk but there is “forward momentum.”

Edens said he sees slow growth ahead and a full return to “normalcy” in 2014 or 2015.

“We do have positives to talk about finally here at home,” he added. “We are seeing an upturn in the number of projects out for bid. Perhaps more importantly, we’re seeing an increase in private projects, which tells us private investors are feeling better about the course of the economy.”

Of the 16 nonresidential construction sectors, 11 saw increases in spending in February, and nine recorded year-over-year increases.

The biggest jump was in the lodging sector, which led the February increase at 4.2 percent and was up year-over-year by a more-than-healthy 16 percent.

The biggest losers in February on a monthly basis were communications (-9.1 percent) and amusement and recreation (-2.2). On a yearly basis, public safety was off 13.1 percent and sewage and waste disposal was down 12.7 percent.

However, at least one the sectors that showed a significant uptick nationally is lagging at home, according to the head of its association. Highway and street project spending was up 3.5 percent on a monthly basis in February, second only to lodging.

Mike Pepper, executive director of the Mississippi Road Builders’ Association, said his members are not seeing any increase in work.

“I’ve seen those figures and have been in on some conference calls about an increase in spending on roads on the national level,” Pepper said. “We are just holding steady, which is better than declining. But, honestly, there’s nowhere to go but up for us.”

Still, one last piece of positive news for February was construction employment, and it was reflected in Mississippi. On a national level, the industry’s unemployment rate stood at 15.7 percent, down from 16.1 percent from the prior month and 17.1 percent in February 2012.

Here in Mississippi, the construction sector added 1,600 jobs in February from the previous month, bringing total construction employment up to 47,600 in February, according to figures from the Mississippi Department of Employment Security.

 

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