Staff Report
Published Dec. 28, 2010

The construction outlook is more optimistic in the Upstate than the Lowcountry, according to the latest construction barometer released by Carolinas Associated General Contractors.

The report showed a 1% uptick overall in North Carolina and South Carolina for the third quarter, despite the disappearance of federal stimulus spending, particularly in the highway and utility segment.

In South Carolina, the barometer inched upward 0.9%, compared to 1.1% in North Carolina. The uptick in labor demand was a bit better in North Carolina, as was the increase in business activity. The downward trend in highway and utility spending was more pronounced in South Carolina, although North Carolina felt it too. Financing conditions eased noticeably in North Carolina while tightening a bit in South Carolina.

In Upstate South Carolina, the barometer increased 2.7% as contractors reported optimism on future business conditions, strengthening demand for labor, and modestly stronger business activity in the face of sharply weaker highway and utility spending. The decline in public construction was a bit more noticeable in the Upstate though, as highway spending plummeted in third quarter and is expected to continue into 2011.

Lowcountry contractors reported growing pessimism, with the barometer dropping 3.4%. They reported significantly weaker demand for skilled labor in 2011, rising labor costs and wage rates, and increasing pessimism about the state of public construction projects anticipated for 2011. Given these weakening conditions, contractors in the Lowcountry reported stable-to-falling equipment and materials costs for third quarter, and growing expectations that overall construction costs will remain stable for several months into 2011.

Across the Carolinas, construction values deteriorated slightly during the quarter, Carolinas AGC said, and contractors expressed concern over unexpected increases in materials and equipment costs. The labor market, meanwhile, showed a little more demand for workers, though unemployment in the sector remains high.

On the financing side, interest rates are at all times lows but loans remain difficult to secure. And loan applications aren’t expected to accelerate much next year, Carolinas AGC reported.

“Like most economic indicators, the barometer suggests we're in a frustrating period of limited economic activity, prolonged high unemployment and sketchy optimism among construction business owners,” the report said.