CIRB:State Construction in 2004 Expected to Grow 2.7 Percent.

Business Editors

BURBANK, Calif.--(BUSINESS WIRE)--Dec. 8, 2003

California's construction volume for the first ten months of 2003 is up 7.6 percent from the corresponding period last year, totaling $58.64 billion.

According to statistical data gathered by the Construction Industry Research Board (CIRB), activity in October, where total construction volume was $6.25 billion, up 8.8 percent from the previous month, played a major role in reversing four consecutive monthly declines since June.

Private building, which includes residential and nonresidential building, totals $44.45 billion in the first ten months of 2003, up 10.1 percent from the same period last year. Public works construction, which includes both government-owned buildings and heavy (civil works) construction, totals $14.19 billion for the first ten months, up 0.3 percent.

In the public works sector, in those first ten months of 2003, public building construction was up 30.8 percent totaling $7.89 billion, a whopping $1.85 billion increase (mostly in school building) from the same period in 2002. Meanwhile, during the same period, the heavy construction portion of public works was down 22.4 percent totaling $6.29 billion, or down $1.81 billion for the same period.

Ben Bartolotto, Director of the 30 year old Research Board, believes good news should continue into next year for private and public construction activity along with a modest growth for the remaining two months of 2003. CIRB analysts forecast the total volume of statewide construction volume in 2004 will increase by 2.7 percent to $69.82 billion. This follows an anticipated 3.7 percent increase in total construction for 2003 at $67.97 billion and a 1.87 percent increase in 2002.

"The strength of the economy today is better than expected," says Bartolotto," and should support another year of growth." Although fiscal constraints at all levels of government threaten public works construction in 2004 due to the state's deficit budgetary woes, Bartolotto says, "We can expect slight improvement overall in construction with modest gains in private building continuing to offset a 2.0 percent net decline in the public works sectors."

Private building construction, led by increases primarily in residential building, is forecast to increase by 4.2 percent in 2004 to $53.79 billion. This year, private building construction is estimated at $51.62 billion, up 5.7 percent from 2002's $48.83 billion. A third straight year of declines in private nonresidential building accounts for most of the loss in private building since 2000, says CIRB. However, Bartolotto feels nonresidential building has bottomed out and is forecasting this sector to improve in 2004 with a 4.3 percent increase to $14.72 billion.

On the other hand, public works construction, heavy (nonbuilding) and public buildings presents the same mixed picture it has for all of 2003. Accounting for nearly 24 percent of all construction in the state, public works construction is estimated to total $16.35 billion in 2003, down 2.3 percent. CIRB is forecasting an additional 2.0 percent decline in 2004 to $16.03 billion. However, public works construction benefits from state and local bond issues approved by voters for schools, state universities and water projects. Still, heavy construction remains as the "weakest link" going into 2004 due primarily to continued reductions in roads and bridge construction which has dropped from a high of $3.84 billion in 2002 to CIRB's forecast of $2.74 billion in 2004.