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Construction Outlook Golden for 2016


Golden State Contractors Can Expect to Continue Winning Ways, With More Growth Projected


By Ken Simonson Chief Economist


Associated General Contractors of America C


alifornia contractors have put together a winning streak that even the Golden State Warriors


might envy. For 50 of the past 51 months (through October 2015), the Golden State construction industry outpaced the nation in year-over-year percentage increase in construction employment. Te prospects for 2016 look bright as well. Construction employment in


California climbed by one-third, or 186,000, from its low point in March 2011 through October 2015. Tat is about two-and-one-half times as fast as the state’s total nonfarm payroll employment, and far faster than the 18 percent growth in construction employment nationally during that period. California contractors have actually


increased their rate of hiring in recent months compared to one year earlier. In the 12 months ending in October 2015, the industry added nearly 50,000 employees, considerably more than the 36,000 added in the previous 12 months. Although the statewide increase


totaled more than 7 percent, the gains were distributed very unevenly across the state. Among California’s 29 metro areas for which the Bureau of Labor Statistics (BLS) provides construction employment data, 18 added construction jobs between October 2014 and October 2015, eight lost jobs, and employment was flat in three. (BLS combines mining and logging with construction in metros with few employers in one or more of those industries.) Notably, the metros adding jobs


were no longer concentrated among the big coastal metros, but showed up in many parts of the state. Te small El Centro metro area posted the


www.AGC-CA.org


steepest job growth (and 10th-highest in the nation) — 14 percent, or 300 combined jobs. It was closely followed by 13 percent job growth in five widely scattered and divergent areas: Riverside-San Bernardino-Ontario, San Jose-Sunnyvale-Santa Clara, San Luis Obispo-Paso Robles-Arroyo Grande, Vallejo-Fairfield, and Visalia-Porterville. All of the state’s largest metros also


added construction employees. Riverside led with 9,800 additional workers in the 12 months through October, followed by Los Angeles-Long Beach-Glendale (9,400 employees added or 8 percent), Anaheim-Santa Ana-Irvine (5,800, 7 percent), San Jose (5,100, 13 percent), San Diego-Carlsbad (3,500, 5 percent), San Francisco-Redwood City-South San Francisco (2,400, 7 percent), and Sacramento-Roseville-Arden-Arcade (1,100, 2 percent). Most areas should continue to


benefit in 2016 from the factors that propelled construction in 2015, both nationally and in-state. Construction spending in the U.S. grew at 13 percent from October 2014 to October 2015, suggesting there will plenty of growth in at least the first part of 2016 compared to the same period a year before. California’s population, overall


employment and economy appear likely to keep growing faster than the nation as a whole. A relatively healthy national economy is adding to demand for California’s tourism, entertainment,


California’s


population, overall employment, and economy appear likely to keep growing faster than the nation as a whole.


high-tech and “new economy” industries, fueling expansion of hotel, amusement, office, and other construction categories. State revenues have grown rapidly,


allowing more spending on public construction. Te federal government may even loosen its purse strings a bit with enactment of modest increases in federal money for highways, transit, and “discretionary” accounts such as military bases and various civilian agencies. But the state is also vulnerable on


a number of counts. Te slump in oil prices has brought a halt to drilling, dragging down construction in formerly fast-growing Bakersfield and surrounding areas. Te drought has reduced demand for construction related to agriculture, food-processing, and distribution. Slower growth in China and other Pacific Rim nations will hurt tourism and investment from abroad and may slow construction of port facilities. Bakersfield lost 1,100 construction


jobs (-6 percent) between October 2014 and October 2015. Napa had the steepest percentage loss of construction jobs among the state’s metros during that span (-10 percent or 400 jobs). Other agriculture-heavy areas also suffered construction job declines: Fresno (-500, -4 percent), Oxnard- Tousand Oaks-Ventura (-300, -2 percent), Madera (-100, -8 percent), Yuba City (-100, -6 percent), Salinas (-100, -2 percent), and Santa Maria- Santa Barbara (-100, -1 percent). Nevertheless, California has proven


remarkably resilient in the past to reverses caused by its many droughts, earthquakes, wildfires, and other natural disasters. Te state should be able to keep its construction winning streak alive in 2016. 


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