CIRB: Decline in State Construction in 2001 is First Since 1995.

Business Editors

BURBANK, Calif.--(BUSINESS WIRE)--Jan. 29, 2002

With year-end figures calculated, California's total construction activity for 2001 totals $61.44 billion, down 3.2 percent from 2000 and represents the first annual decline since 1995's $39.51 billion.

According to statistical data gathered monthly by the Construction Industry Research Board (CIRB), the state's private building activity (residential and private nonresidential construction) is the main reason California's total construction volume declined. Private building totaled $45.32 billion in 2001, down 5.4 percent from 2000.

Meanwhile the state's public works construction activity, which covers highway-heavy (non-building) and public buildings (government-owned buildings), the annual total is $16.12 billion, up 3.6 percent. Yet, California's total construction volume of $61.44 billion still declined by $2.02 billion in 2001.

And the news doesn't get better. For 2002 Ben Bartolotto, Director of CIRB is forecasting the state's construction volume to drop another $4 billion to $57.39 billion. This represents a 6.6 percent decline from 2001.

In December, the state's construction activity totals $4.37 billion, up 13.0 percent from November but down 16.8 percent from December 2000. CIRB's Bartolotto says the December figures -- especially in residential building, which is up 22.6 percent from November -- are misleading. A state building energy code conceivably inflated the private building numbers in December, says Bartolotto, as a large number of permits were obtained in advance of the anticipated code changes.

Several factors are offered by the Construction Industry Research Board to explain the decline in the state's construction volume in 2001 and the anticipated 6.6 percent decrease in 2002:

-- Even with the lower interest rates available, the recovery in the
residential building sector still stalled. The downturn in the economy didn't
help either.

-- Private nonresidential building totaled $16.64 billion in 2001, down $1.97
billion or 12.8 percent from 2000. This is the first annual decline in this
sector since 1993. This decline is due mostly to a 20.8 percent drop in the San
Francisco Bay Region's nonresidential totals which led this sector in 2000 and
1999.

-- Strength in the highway-heavy construction sector in 2001 which totals $9.52
billion, was linked to aggressive power plant construction starts. In 2002,
there are fewer identified power plant starts scheduled and this could extend
through 2003.

The public building sector (government-owned) of public works construction totals $514 million in December, up 0.9 percent from November. Major projects in December include a $50.0 million UC Biomed facility in Yolo County and a $27.4 million UC science building in Santa Barbara County. CIRB reports the public building sector, the one shining light in 2001 figures, totals $6.60 billion, up 11.1 percent from 2000. However, this sector is forecast to decrease to $6.29 billion in 2002, down 4.7 percent from 2001.

(For further information, call Ben Bartolotto at 818/841-8210).