The numbers are in; Permit values edged up 2% in June compared to May 2009; Non-residential permits fell 21%; Residential permit values jumped 29%; Housing starts decline by 10%; Construction employment increases by 3%.
What does it all mean?
For one thing, these figures demonstrate the volatile nature of the current economy and the difficulty of getting a clear picture of what is happening. As the economic cycle continues to play through, we can expect to see some conflicting numbers that are seemingly contradictory and which make it very difficult to forecast. In general, I trust the reports that have come out and that we are nearing the end of the downturn. However, we can expect to see conflicting signals as we bounce along the bottom of the economic cycle for the next few months.
I believe what is important to recognize is that we are indeed nearing the bottom of the cycle. The activity level of the regional construction industry is operating at a level where it was in 2006, in terms of building permit values and employment. In spite of eight months of continuous declines there are more people still working in construction than there were in 2006. Non-residential permits are about where they were in 2005
In talking to several contractors lately the general outlook was that while it is certainly slow right now there is a mood of increasing optimism.
There are several major projects that are in the works that will soon be out to tender. It seems that even some of the major residential projects that came to a screeching halt in October 2008 are being dusted off and re-examined.
One thing we know about economic cycles and construction is that there will be a recovery. While it is still not clear as to when this might be, it does appear that recovery is in sight. In the meantime the prudent contractor will continue to monitor the market, continue to ensure costs are under control and pay attention to the business.