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Regional Outlook: 2010 a Bit Better than 2009

Year will start on low note but reach slight growth by end

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Industry indicators show that the construction industry’s decline has slowed and many industry experts expect the upturn to start sometime in 2010. Although many factors can affect the recovery, nearly every expert we interviewed thinks the industry faces a long slow climb back to prosperity.

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The outlook for 2010 in the Midwestern construction industry calls for a bottoming out early in the year, followed by slow growth through year’s end.

Although 2010 will represent a slight improvement over 2009, it will not be anywhere near as good as 2008, and industry experts seem to agree that the recovery will be a long, slow climb rather than a quick leap.

Although the sluggish conditions will persist pretty much throughout the entire spectrum of non-residential construction, a few of the brighter spots should be in public-sector building funded by American Recovery and Reinvestment Act (stimulus) money and in some healthcare work.

Economy’s Decline Slowing

Key indicators show that the economy and construction industry’s decline is slowing and should bottom out in the first quarter of next year.

By any measure, 2009 has been a tough year for the industry.

NON-RESIDENTIAL AND NON-BUILDING STARTS (MILLIONS OF DOLLARS)
State Project Type 2008 2009 2010 Change: 10 vs 09
ILLINOIS Nonbuilding $9,674 $5,628 $6,424 14.14%
Nonresidential $10,459 $4,757 $4,833 1.60%
Total $20,133 $10,385 $11,257 8.39%
INDIANA Nonbuilding $5,453 $2,855 $3,132 9.67%
Nonresidential $8,672 $3,583 $3,035 -15.30%
Total $14,125 $6,438 $6,167 -4.22%
MISSOURI Nonbuilding $2,776 $3,179 $2,946 -7.34%
Nonresidential $3,187 $2,551 $2,637 3.36%
Total $5,963 $5,730 $5,583 -2.57%
WISCONSIN Nonbuilding $1,947 $2,166 $2,006 -7.38%
Nonresidential $3,481 $2,172 $2,536 16.72%
Total $5,428 $4,339 $4,542 4.68%

Construction activity has been down and continues to decline across most segments of the industry, and it would have been worse, particularly in the transportation sector without the boost provided by the American Recovery and Reinvestment Act’s “stimulus” funds.

For example, Pat Goss, Executive Director of the Wisconsin Transportation Builders Association, notes that without stimulus money, 2009 would have been Wisconsin transportation’s third worst year in the last 19. Stimulus projects vaulted 2009 to the third-best year in that span.

Nationwide, according to the Bureau of Labor Statistics, construction spending through October, 2009, was $794.0 billion, down 12.6% from the $908.9 billion spent at the same point in 2008.

But at least the rate of decline seems to be slowing.

The American Institute of Architects’ Architecture Billing Index rose from 45.1 in September to 46.1 in October, its...

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