Construction Barometer™ > Previous Quarter Results

News Release - 1st Quarter 2002

Summer Results 2002 (Based on First Quarter 2002)

Construction Barometer Slides Down 5.4% Highway and Utility construction drop-offs lead decline The Carolinas AGC Construction Barometer™ posted a 5.4% decline during the first quarter of 2002, giving up virtually all of the gains it evidenced in the fourth quarter of 2001. The decline was broad-based, affecting virtually all 5 economic regions in the two-state area in the same manner. The decrease also showed up across both the Qualitative Series (down 5.1%) and the Quantitative Series (down 5.7%) of the Barometer. Similar to past economic history, the larger, more urban regions of the Carolinas experienced a smaller drop in business activity, with smaller, less populous regions experiencing the greatest decline in economic growth.

South Carolina appears to be feeling the heat a little more than North Carolina, with SC’s Barometer down 8.9% and NC’s down 3.8%.

The biggest reason for the economic malaise that’s descended on the region is evident in the Business and Economic Trends section of the Quantitative Series, which posted a whopping 21.5% drop from Q4 2001. It’s rare that any particular Barometer value changes by this magnitude in a given quarter, and the reason for the precipitous drop is a fall-off in anticipated highway and utility spending by local governments, and a similar drop in heavy equipment purchases and rentals by survey contractors. Clearly, the crisis in state and municipal governments is now taking a big toll on construction activity.

A bright spot in the diminished economic activity and increasing unemployment is an easing of the labor availability shortages that we’ve experienced the past few years, and little upward pressure on wage rates and materials costs noted in the construction environment. In addition, continuing low interest rates mean that financing costs have reached a 40-year low point, and contractors report very few problems negotiating new loans. At the same time, there’s very little new loan growth present in the Carolinas construction industry, as contractors have wisely decided to postpone debt-financed expansion activity until better economic conditions emerge in the region.

While both Carolinas experienced a similar drop in Business & Economic Trends owing to reduced highway and utility spending, the SC labor market fared worse in Q1 2002. SC contractors reported they would reduce their hiring plans for the remainder of 2002, while NC contractors reported very little change in 2002 hiring plans.

As the largest AGC chapter in the US with 3,300 member firms, Carolinas AGC builds its members’ businesses through workforce development, business development, profit management, and a self-insured workers’ compensation trust. More than 75% of commercial/industrial work (buildings, highways, utility facilities) in the Carolinas is performed or supported by CAGC members.