California Construction Continues to Sputter
Bartolotto points out that California's total construction volume after four months was $21.5 billion, an increase of 18.8% year-to-date. Then, in May the five month year-to-date volume was $27.1 billion, a 14.3% increase. This is a 4.5% drop in the year-to-date comparisons from the same period last year.
Private nonresidential building, the steadiest sector over the past five years, shows the slow down even clearer. Seasonally adjusted the May nonresidential building total of $1.56 billion is an annual rate of $15.88 billion, down 2.5% from April and down 13.7% from May 2000. Bartolotto says the annual rates of the past three months average $16.03 billion. This is down 15.9% from the $19.07 billion average rate of the previous 12 months.
According to CIRB, the total nonresidential building adjusted for inflation is forecast to decrease by 5.3% in 2001, and to decrease by 5.8% in 2002. These declines would be the first in private nonresidential buildings since 1993.
Four major power plant projects totaling $1.325 billion have helped inflate statewide public works construction figures in the first five months to $7.49 billion. This is up $1.784 billion, or 31.2% from the same period last year.
CIRB analysts note that when the statistical effect of major projects is spread over the remainder of the year a more modest percentage increase is expected for all of 2001. For example, in April year-to-date public works total construction for the first four months was $6.28 billion, up 41.9% from April 2000. In comparison, five month year-to-date public works construction activity totals $7.49 billion, up 31.3% -nearly a 10 percent decline from May 2000. Another downturn indicator is when projects and contracts of less than $10 million in size are separated out, the year-to-date public works construction totals drop substantially. By limiting total public works projects to less than $10 million in size during the first five months this activity shows a decline of 1.7% compared to the 31.3% increase when all projects are counted. These projects and contracts under $10 million account for 41.6% of the public works construction total in the first five months of 2001 and 55.5% in the same period last year.
One final indicator that the gap is closing is May's total public works construction totaled $1.43 billion, down 44.2% from April and down 10.5% from May 2000.