Staff Report
Published June 29, 2011

The Carolinas Associated General Contractors’ quarterly construction barometer showed little change in the construction industry in both North Carolina and South Carolina in the first three months of 2011.

The aggregate barometer score declined 0.8%, as slightly stronger business conditions observed across the first quarter were offset by falling contractor expectations about future business conditions, coupled with rising wholesale prices, the construction association said.

In the Lowcountry, contractors reported moderately rising construction materials and equipment prices. The Lowcountry saw a decline in private-sector activity but rising highway spending.

Hiring conditions compared with last quarter remained unchanged, wage rates remained stable, and there was less conviction that costs will increase in the coming year. Although there’s an expectation among Lowcountry contractors that business activity will remain slow, there’s a significantly more sanguine attitude about the year ahead than in the Upstate, where optimism is diminished regarding 2012 predictions.

Construction volume increased throughout the Carolinas for the first three months of 2011, surpassing contractors’ expectations for the quarter and leading to a slight increase in labor demand, the contractors group said.

Given the substantial contraction in the construction labor market over the last few years, contractors reported difficulty in hiring skilled workers because so many have migrated to other industries, the group said. At the same time, contractors reported rising labor costs, particularly in the employee benefits area.

But the first quarter’s business improvement isn’t carrying forward into the remaining months of 2011, the organization reported. In previous quarters, barometer panelists reported increased optimism for 2012, with fewer contractors remaining in business and expectations of more work coming down the pipeline.

However, panelists now believe that 2012’s business conditions could be worse. They’re expecting modestly diminished business activity, a lower rate of equipment and inventory purchases, reduced hiring activity and weaker demand for long-term credit toward the end of 2011 and into early 2012.