WASHINGTON, DC-A planned 6.2% cut in federal spending on construction and infrastructure will worsen an already grim construction employment outlook for 2012.

A new analysis by the Associated General Contractors of America finds that construction employment declined in 146 out of 337 metropolitan areas between November 2010 and November 2011. Employment increased in 131 and stayed level in 60. Next year, the ratio between cities in which construction employment increased and decreased could be even greater, according to Ken Simonson, the association’s chief economist.  “There is no avoiding the pain that comes any time the single largest purchaser of construction services cuts investments by nearly 20% in two years,” Simonson said in a prepared statement.

Simonson also noted that the fiscal year 2012 federal construction budget will be 18% smaller than the same budget for 2010. Many of the federal construction cuts were included in the recently passed Omnibus Appropriations Bill. “It will take a lot more private sector growth to offset declining federal demand,” he added.

It is possible that the private sector may fill some of that gap, based on separate news released shortly before the Christmas holiday by the American Institute of Architects. Its Architecture Billings Index jumped nearly three points from October to November, to land in positive territory for the first time since August. The November ABI score was 52, following a score of 49.4 in October. “This is a heartening development for the design and construction industry that only a few years ago accounted for nearly ten percent of overall GDP but has fallen to slightly less than six percent,” said Kermit Baker, chief economist at AIA in a prepared statement. “Hopefully, this uptick in billings is a sign that a recovery phase is in the works.”

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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.