Carolinas' Outlook Stays Hot in Growth, Labor Market Easing; Carolinas AGC Construction Barometer Signals Good News for Contractors
CHARLOTTE, N.C., Jan. 28 /PRNewswire/ -- Winter results of the Carolinas AGC Construction Barometer(TM) (based on third quarter 1999) show that the region's growth has fallen from "white hot" to "red hot." The grand index decreased 2.1% to 2.85 on a scale of one to five. This modest drop, says Tony Plath, UNC-Charlotte associate professor of finance and originator of the Barometer's methodology, illustrates good news for contractors because hiring conditions may get easier in the coming months. "The quantitative component of the index decreased almost entirely due to a slight increase in unemployment, which signals less upward pressure on wage rates and easier hiring conditions moving into the next few quarters." The decrease in the quantitative component is offset somewhat by rising optimism reported by both contractor panelists (up 2.8%) and allied industry panelists (up 5.1%). Barometer contractor panelists in all but Western NC reported easing labor market conditions for the end of 1999. These contractors expect this trend to continue through the first quarter of 2000. As a consequence, labor rates are expected to moderate in coming months, continuing the trend toward diminished hourly labor costs observed within Eastern and Heartland NC, and Upcountry SC. Western NC represents the only region where contractors are reporting rising labor costs and greater hiring difficulty. "It seems as though all the other regions have been experiencing record unemployment for so long and it's now just hitting the Western region," says Barometer panelist Mike Long, president of Asheville's Taylor & Murphy Construction Co., Inc. "I don't see any relief in the near future. Not only is there more work, but there are also more contractors to compete with." Reflecting on the past year, construction growth in 1999 skyrocketed throughout the Carolinas, says Plath. "As a consequence, we saw two trends emerge: a shortage in labor, and scarcity of construction materials. The Barometer was able to capture these trends, as well as the rate of slowed growth and volatility of the interest rates. I'd say our predictions for the past year have been on track." The Carolinas AGC Construction Barometer debuted last January with the results of third quarter 1998. The current index is down only -1.3% as compared to this same time last year. "In the first half of 2000, we should see the workload for contractors become more manageable," says Plath. "This winter, contractors should be able to catch their breath since the majority of funding to rebuild Eastern NC in the aftermath of Hurricane Floyd will not begin until this spring." Plath adds that more than $1 billion in new construction spending to help flood- stricken Eastern NC is expected, and will come from three sources: insurance and private money, and state, and local government funding. "The bottom line," says Plath, "is that we will begin to see strong, rapid growth across the region accelerate again, particularly due to the impact of funding for Hurricane Floyd. But our growth will most likely be punctuated by periodic shortages for key building materials again." Carolinas AGC is the nation's largest chapter of the AGC of America. The association's mission is to build its 3,400 members' businesses through workforce development, business development, profit management, and CompTrust AGC -- a self-insured workers' compensation trust for members. More than 75% of commercial and industrial construction (buildings, highways/bridges, utility facilities) in both North and South Carolina are performed by Carolinas AGC members.
SOURCE Carolinas AGC
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