Staff Report
Published Oct. 14, 2010

South Carolina contractors seem more optimistic about future business activity than their colleagues in North Carolina, though the market isn’t expected to improve, according to the latest report from the Carolinas Associated General Contractors, released today.

Industry conditions for 2011 aren’t expected to weaken significantly, Carolinas AGC reported, but improvement is unlikely.

In South Carolina, the Lowcountry posted a strong 9.4% gain in its AGC Construction Barometer for the second quarter. The Carolinas AGC attributed the growth to big gains in skilled labor availability and improved credit market conditions. In spite of these reported improvements, Lowcountry contractors reported falling demand for labor and no change in borrowing plans for the remaining months of 2010.

The Upstate’s barometer, meanwhile, dropped 1.6%. Lowcountry and Upstate contractors reported weaker construction activity and falling overall construction costs.

In the Lowcountry, gains in business activity are expected to occur in public works spending areas, with contractors projecting a significant increase in highway and municipal utility spending for the coming year. Upstate contractors expect diminished highway and utility spending but a healthy uptick in private commercial work in the coming year.

With a 1.5% increase, South Carolina fared better in its Construction Barometer than did North Carolina, which saw an 0.8% increase for North Carolina.

A slight dip in spring activity was offset by falling materials costs, lower overall construction supply costs and record-low interest rates, the Carolinas AGC reported. However, continued fiscal stress across the state and local governments, along with diminished federal stimulus spending, suppressed the public highway and utility projects usually seen during the second quarter.

Contractors reported that they expect the low level of public works construction to continue into 2011, accounting for much of the diminished expectations for overall growth in 2011.

Financing remains a concern. Contractors reported continuing record-low interest rates for short- and long-term borrowing, but no contractors reported new loan applications during the second quarter.

N.C. contractors reported a modest uptick in second quarter hiring, while S.C. contractors reported no change.

Financial market conditions differed slightly across the two states as well. S.C. contractors reported easier credit terms from regional bankers, while North Carolina contractors reported a modest tightening in the availability of credit and banker willingness to underwrite new contractor loans.