WASHINGTON, DC-Development, not exactly an exploding activity in the last two years to begin with, appears to be on the brink of stagnation, based on two real estate metrics released last week. One, the Architecture Billings Index--a leading economic indicator of new projects--continues its disconcerting drop. The second, a new analysis of construction employment figures, shows that employment is moving, at best, only sideways.
This, to be sure, is better than 2008, 2009 and 2010 when it was dropping, Associated General Contractors of America spokesperson Brian Turmail tells GlobeSt.com. However the progress in 2011, he says, has been scant. “We keep getting these reports,” he says. “One month 26 states have added jobs, the rest have lost jobs. Then the next month 25 states added jobs, and so on.”
According to its most recent analysis, construction employment increased in 26 states between July 2010 and July 2011 and during the past month. “When it comes to construction employment, for every state adding jobs there is another one shedding just as many or more,” Stephen E. Sandherr, the association’s chief executive officer, says in a prepared statement. “The fact that this industry is breaking even when it comes to construction employment is little comfort for many unemployed construction workers.”
The largest percentage increase in construction employment during the past year took place in North Dakota--19% for 4,000 jobs. Other states experiencing large percentage increases included Illinois, Michigan and Oklahoma. Texas added the most jobs during the past year--23,800 jobs at a 4.2% growth rate, followed by Illinois, California and Michigan.
The Architecture Billings Index, which reflects approximately nine to twelve month lag time between architecture billings and construction spending, does not hold out hope for immediate improvement.
Following a drop of almost a full point in June, it fell again by more than a point in July. The July ABI score was 45.1--the steepest decline in billings since February 2010--after a reading of 46.3 the previous month.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
