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Associated BuildersÌ 2010 Forecast Shows Signs Of Recession's End, Jobs Returning

Associated Builders’ 2010 forecast shows signs of recession’s end, jobs returning

Source: Associated Builders and Contractors, Washington, D.C.

While the construction industry battled the effects of the recession in 2009, expect 2010 to be a sluggish transition on the road to recovery, says ABC Chief Economist Anirban Basu. Through late 2008, the industry held up well, he added. But 2009 was a year of retrenchment for many construction sectors, including those associated with private development and municipal projects. Overall, the nonresidential construction industry has been impacted by a combination of financing constraints, massive job loss and a lack of confidence in local economies across the nation due to falling tax revenues.

Basu points to the American Recovery and Reinvestment Act (ARRA) of 2009 as a economic jump-start policy that is now beginning to show signs of aiding the turnaround for construction with support of recent water/sewer and road resurfacing projects. These segments are positioned to be among the big winners in 2010. Segments that are less closely aligned with federal spending are generally poised for another rough year in 2010, he said. One of the biggest beneficiaries of ARRA will be the public sector. Public buildings--particularly courthouses and federal facilities in need of modernization--will receive a sizeable increase next year due to stimulus funds reaching the market.

ABC's prediction last year that nonresidential construction employment would be down in 2009 was, unfortunately, accurate as job levels dropped 13.3 percent. The forecast for 2010 is for these jobs to be down in the mid- to high single digits on a year-over-year percent change basis. On the plus side, residential construction employment numbers are expected to head back up by as much as 6.0 percent in 2010, according to ABC.

Basu points out that one of the more positive aspects for contractors has been declining construction materials prices, which are expected to remain stable in the coming months, making it possible for contractors to submit bids on long-term projects with great confidence. Between August 2008 and August 2009, nonresidential building producer prices decline nearly 8.0 percent. Basu's complete 2010 forecast can be found on ABC's website.