Construction spending drops to lowest level in six years

Construction employment grew in only four out of 337 metropolitan areas in 2009 as spending on construction projects dropped by $100 billion in December to a six-year low of $903 billion, according to an analysis of government statistics by the Associated General Contractors of America.

"The impact of the stimulus is clearly being overshadowed by the sweeping downturn in overall construction demand," says Ken Simonson, the association's chief economist. "Without those public investments however, a bad employment situation will only get worse during 2010."

Simonson notes new Census Bureau figures that show private non-residential spending dropped 18 percent compared to December 2008. He adds that only power construction increased from year-ago levels by 14 percent. Developer-financed categories recorded especially large declines, including lodging (down 46 percent); retail, warehouse and farm (down 37 percent); and office (down 35 percent).

In contrast, publicly-funded construction increased by 1 percent between December 2008 and December 2009, Simonson notes. He adds that stimulus spending helped boost highway and street construction by 3.7 percent, making it the largest public category. Educational construction, however, dropped 4 percent during the year. Private residential construction dropped 11 percent for the year as multi-family construction tumbled, even though spending on single-family housing has increased for seven months in a row.

Simonson says the declines in construction spending were leading to layoffs in almost every community in America. Leominster/Fitchburg, Mass., lost a larger percentage of its construction work force (38 percent) during 2009 than any other metropolitan area, according to the latest Bureau of Labor Statistics figures. The agency includes mining and logging with construction in most metro areas to prevent disclosure about industries with few employees.

Other areas experiencing sharp declines in construction employment during the year include El Centro, Calif. (36 percent); and Santa Fe, N.M.; Pocatello, Idaho; and Kokomo, Ind. (all 29 percent). Meanwhile, the Houston area lost the most construction jobs (25,500) between December 2008 and  December 2009.

Of the four metropolitan areas with an increase in construction employment during the last 12 months, only two areas had gains of more than 100 jobs: Harrisburg/Carlisle, Pa. (1,500 jobs, 13 percent gain) and Tulsa, Okla. (700 jobs, 3 percent gain). Two metro areas had gains of 100 jobs each in construction: Springfield, Ohio (8 percent) and Columbus, Ind. (5 percent).