Carolinas' Outlook Stays Hot in Growth, Labor Market Easing; Carolinas AGC Construction Barometer Signals Good News for Contractors

Jan 28, 2000, 00:00 ET from Carolinas AGC

    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