CIRB: State Construction Expected to Grow 1.7 Percent in 2005.

BURBANK, Calif. -- California's construction volume for the first ten months of 2004 is up 10.6 percent from the corresponding period last year, totaling $65.48 billion.

According to statistical data gathered by the Construction Industry Research Board (CIRB), activity for the month of October shows total construction volume is $6.5 billion, down 4.1 percent from the previous month. However, the year-to-date figures for 2004 reveal increases in private and nonresidential building and in heavy construction offsetting declines in public-buildings construction.

Ben Bartolotto, Director of the 31-year-old Construction Industry Research Board, is forecasting total volume of construction in California to increase by 1.7 percent to $78.15 billion in 2005. With two more monthly figures still to come in 2004, CIRB is estimating total construction volume for 2004 at $76.84 billion, up 3.7 percent from 2003, which showed a 5.9 increase that year.

According to Bartolotto, a much-improved economy in the past ten months helped construction to grow. However he points out, "Fiscal constraints and uncertainties continue to threaten the public works sector and combined with growing inflation in construction costs work to offset the benefits of the improving economy and tend to limit real-dollar increases in construction volume." Concerns about inflation on the national level, says Bartolotto, are likely to force higher interest rates which could impact single-family housing in particular.

Private building, which includes residential and nonresidential building, totals $50.46 billion in the first ten months of 2004, up 12.4 percent from the same period last year. Public works construction, which includes both government-owned buildings and heavy (civil works) construction, totals $15.01 billion for the first ten months, up 5.0 percent.

In the public works sector, in those first ten months of 2004, public building construction was down 6.2 percent totaling $7.53 billion. Meanwhile, the heavy construction portion of public works, during the same period, was up 19.5 percent totaling $7.48 billion, or up $1.21 billion for the same period.

Private building construction is forecast to increase by 1.7 percent in 2005 to a total of $60.40 billion. This total shows an 8.1 percent increase in private nonresidential building more than offsetting an estimated 0.6 percent decline in residential building. This year, private building construction is estimated at $59.41 billion, up 5.2 percent from 2003's $56.45 billion. Both residential and private nonresidential building have comparable gains in 2004, up 5.2 percent and 5.3 percent, respectively. This gain in private nonresidential building follows three straight years of decline. The increase in 2004, says CIRB, can be attributed primarily to the improved economy as well as sufficient time for increased economic activity to translate into business expansion.

For the month of October, public works construction, heavy (nonbuilding) and public buildings, totals $1.7 billion, up 7.5 percent from September. The same mixed picture of 2003 is again repeated in 2004 with public buildings construction down 6.2 percent to date, and heavy construction up 19.5 percent. The public building sector (government-owned buildings) totals an estimated $8.78 billion in 2004, down $1.09 billion, or 11.0 percent from 2003. The year-2004 estimated total for heavy construction is $8.65 billion, up 11.0 percent. The largest category in heavy construction (after roads and bridges) is water and sewer works construction.

Accounting for nearly 23 percent of all construction in the state, total public works construction is estimated by CIRB to total $17.43 billion in 2004, down 1.3 percent. This decline is due to a lack of very large projects. However, CIRB is forecasting public works to increase in 2005 by 1.8 percent totaling $17.75 billion.