News Release > 4th Quarter 2002

(Based on Fourth Quarter 2002)

Weather-Related Unemployment Responsible

The most recent Carolinas AGC Construction Barometer™ decreased 2.3% during the fourth quarter of 2002— giving back all of the gains from the previous Barometer, which tracks quantitative data as well as sentiment among contractors and industry allies. This is due primarily to weather-related increases in the North Carolina unemployment rate. The composite Carolinas score now stands at 2.97 on a scale of one to five, with five as most favorable.

In essence this most recent Barometer shows that the Carolinas commercial construction industry is stuck in slow growth mode.

“As we reported in the last Barometer, it appears that the 2001–2002 recession has bottomed out. Economic conditions aren’t getting any worse in the Carolinas, but they are not getting a lot better either,” says Tony Plath, UNCC associate professor of finance and developer of the Carolinas AGC Barometer. “Highway and utility construction activity are off, and North Carolina Department of Transportation spending has decreased. It appears that both are temporary, weather-related events.”

Quantitative, or hard data, dipped 6.1% overall. North Carolina’s quantitative index moved down 9.8%, and South Carolina’s moved up 2.6%. It appears that the improvements seen in third quarter 2002 unemployment numbers in North Carolina arrived in South Carolina a quarter later, breaking the rising unemployment trend there.

Overall contractor sentiment was up 0.6%, driven entirely by a 1.8% increase among South Carolina contractors. The North Carolina contractor quantitative index showed no movement. Architects and suppliers’ sentiment in North Carolina panelists decreased 4.6%, while South Carolina panelists’ sentiment moved up 2.9%. The architect/supplier subcomponent of the index declined 2.3% overall.

South Carolina overview

South Carolina’s Barometer rose 2.9% to 3.10, continuing the climb it began in second quarter 2002. A 1.8% increase in contractor sentiment and a 2.6% increase in the quantitative data drove the South Carolina index higher.

Labor market conditions in the Upstate strengthened more significantly than in the Lowcountry, while business and economic conditions improved in the Lowcountry much more significantly than in the Upstate.

The real story in fourth quarter numbers is in the Lowcountry, where contractors reported improvements in all 3 qualitative measures. Employment Trends bounced up 10.4%, as Business and Economic Conditions advanced 10.3% and Financing Availability edged up 3.0%. It’s unclear why Lowcountry contractor sentiment has strengthened ahead of the hard economic indicators. Highway and utility spending is down, reflecting the same sort of trend seen throughout the Carolinas, but contractors report rising anticipated business volume in coming quarters, and significantly, contractors in the region purchased far more heavy construction equipment during the quarter. This could be an indication that contractors are taking advantage of some good deals on heavy equipment during a time when the construction equipment industry is particularly slow, or it could signal that an uptick in construction industry activity is beginning in the Lowcountry. It’s too early to tell what’s up, but there’s definitely something going on down there that’s not happening elsewhere in the Carolinas.

North Carolina overview

The North Carolina Barometer fell to 2.91, a 9.8% decrease from third quarter 2002, due to a 19.2% decrease in quantitative Business and Economic Trends, and a 16.1% decline in quantitative Employment and Labor Trends.

Eastern and Western North Carolina contractors were less bullish in fourth quarter, down 2.8% and 2.0% respectively. Heartland contractors eked out a 1.2% gain, enough to keep North Carolina’s qualitative number flat overall.

The decreased work on the North Carolina transportation infrastructure didn’t do quite the damage in Western NC that it did in the Heartland, but the combination of rising employment and falling DOT spending isn’t particularly good news.

The same economic forces driving the Western NC region are driving the Eastern construction economy, except the upturn in general unemployment is larger in the East, and the downturn in the general level of business and economic trends is somewhat smaller in the East. Job losses in the region don’t indicate a significant downturn in business and economic conditions there, it’s simply a fact that jobs vanish during winter at the beach.

As in all regions across the Carolinas, there was a big downturn in the Heartland region’s employment and labor trends. However, this was eclipsed by an even bigger downturn in business and economic trends. For this to occur in the fourth quarter as a consequence of falling highway and utility activity, and at the same time as falling DOT funding, suggests that the change is a temporary weather-related reduction in road building activity that coincides with the winter months.