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Many States Left Out of Heavy Construction Surge

0 211 Market Intelligence

Heavy construction starts are up 9.8% year to date through October compared to the same period last year. Credit the stimulus plan for a large share of this gain. The surge in heavy construction varies widely across the country. Year to date changes in heavy construction starts range from over 100% gains in three states to 50% or more decline in two states, says Reed Construction Data chief economist Jim Haughey.

Heavy construction starts are up 9.8% year to date through October compared to the same period last year. Credit the stimulus plan for a large share of this gain. The surge in heavy construction varies widely across the country. Year to date changes in heavy construction starts range from over 100% gains in three states to 50% or more decline in two states. This disparity is not due to the stimulus plan which distributed funding very uniformly across all states for the highway and water projects that were the first to be started.

The variation in heavy construction starts among states is mostly due to the amount of locally funded work in the planning process when the recession abruptly deepened in fall 2008. How quickly states put their stimulus funds to work also contributes to the variation among states.

% Change in Heavy Construction Starts
  Jan-Oct ’09
vs Jan-Oct ’08
  Jan-Oct ’09
vs Jan-Oct ’08
  Jan-Oct ’09
vs Jan-Oct ’08
DE 390.7 HI 26.2 NY -1.0
CT 200.1 NJ 26.0 VA -2.3
SC 105.1 PA 24.2 Al -3.1
ME 96.9 ID 24.1 WV -5.1
NC 96.7 WI 22.5 ND -5.7
KY 90.3 MA 19.3 DC -6.5
RI 60.6 MO 17.7 MI -10.7
NM 55.5 FL 15.9 KS -10.9
LA 55.1 TN 13.7 TX -11.3
MD 48.8 VY 9.7 CO -12.1
OK 46.9 MT 8.7 WA -13.1
IN 46.4 IA 8.1 MN -23.6
OR 43.5 SD 7.8 UT -27.2
MI 39.2 OH 4.2 NV -33.1
NH 37.4 IL 4.1 GA -34.2
AK 33.7 NE 0.7 AZ -49.8
AR 30.9 CA 0.2 WY -66.0
U.S. 9.8 Source: Reed Construction Data

The biggest surges in heavy construction activity are in Delaware (+390%), Connecticut (+200%) and South Carolina (+105%). More highway and bridge work account for the large increases in each of these states. More water and sewer work also contributes in South Carolina. The overall recession is very severe in Delaware and relatively mild in Connecticut. The recession was initially severe in South Carolina but has recently become very mild.

Arizona (-50%) and Wyoming (-66%) are at the bottom of the list. The steep decline in Arizona is a combination of lower state funding for Highways and fewer new power and resource development projects. The recession has been unusually deep and long in Arizona. Wyoming escaped the initial national recession with a boom in oil and gas field development but fell into a very deep recession early this year when collapsing energy demand and prices caused cancellations of energy development projects.

Seventeen states have lower heavy construction starts year to date through October than they had last year. They have been left out of the heavy construction boom. Note that this group includes many of the larger states: Arizona (-50%), Georgia (-34%), Washington (-13%), Texas and Michigan (-11%), Virginia (-2%) and New York (-1%). Also California, Illinois and Ohio have well below average gains of less than 5%.

Other states with 50% plus gains include Maine and North Carolina (+97%), Kentucky (+90%), Rhode Island (+61%) and New Mexico and Louisiana (+55%). Highway, Bridge, Water and Sewer projects have driven the big increases in every state except Louisiana while lingering Katrina repairs and replacement dominate.

Nationally, jobsite construction spending is up 1.8% year to date through October compared to the same period a year ago. This is well short of the 9.8% gain in construction starts. The heavy construction pipeline is full, including a surge in project starts in the last few months. This will keep heavy construction spending about steady through 2010.

by Jim Haughey

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