Rising demand in the private sector has boosted construction employment in Ohio and construction spending nationwide, raising hopes that the industry is gathering momentum and will help the economy's sluggish expansion.
U.S. construction spending in May was at the highest level in more than two years, and Ohio's construction industry saw the fifth consecutive month of year-over-year employment growth, according to data analyzed by this newspaper.
Increased construction investment both signals economic growth and stimulates it, and the industry is an important employer and contributor to the state's gross domestic product, officials said.
Although construction employment dipped in the region this year, industry experts said local private-sector projects are picking up, and promising prospects, such as the proposed $300 million lifestyle center in southern Butler County, are on the horizon.
"Short of a financial meltdown -- where nobody wants to borrow money or take risks -- I am not negative at all on the area when it comes to construction," said Ed Blake, senior partner with Miller-Valentine Group.
"We've seen some very good activity."
In May, about 176,200 people in Ohio were employed by the construction industry, according to an analysis of preliminary, seasonally adjusted data from the U.S. Bureau of Labor Statistics by the Associated General Contractors of America.
Employment was up 3 percent from 171,600 people in May 2011 and 6 percent from 166,700 from May 2010, according to the analysis. The state's construction employment grew year-over-year in the first five months of 2012, and it grew 17 out of the last 18 months.
Nationwide, however, the construction industry shed jobs in June, falling 2 percent from June 2011, according to federal data released Friday. Ohio-specific data was not available.
Ohio's construction sector has benefitted from manufacturers, energy companies, health care providers and residential builders investing in new and upgraded facilities, said Ken Simonson, chief economist with the Associated General Contractors of America. Pent-up demand led to a surge in private-sector spending this year, he said.
"Finally we are getting to the point where manufacturers and power companies need to expand, and office, retail and lodging are seeing interest in remodeling or refashioning existing spaces," he said.
Economic uncertainty caused private companies to delay or nix expansion projects, said John Morris, president of the Ohio Valley chapter of Associated Builders and Contractors.
Public-sector investments accounted for the bulk of construction spending, and so it remained until governments were forced to slash their budgets in the wake of declining property values and falling tax revenues.
But as public-sector spending slowed, many businesses despite lingering anxiety reached a point where they could no longer delay expansion projects, Morris said. "The private sector sat on their money for a couple of years, and now they can't sit on it any longer because some of these projects have to move forward," Morris said.
The private sector was responsible for U.S. construction spending rising 0.9 percent to $830 billion between April and May, according to a report released earlier this month by the U.S. Department of Commerce. Spending was up 7 percent from May 2011.
Private-sector construction spending between May 2011 and this May rose 13 percent to $560.4 billion nationwide. During the same period, public construction spending fell 4 percent to $269.6 billion. Public spending decreased every month of this year compared to 2011.
In the private sector, factory construction picked up, and there is increased demand for new and renovated retail and office space, officials said. Natural gas exploration in the eastern part of the state has led to a frenzy of infrastructure work.
Residential construction has also gained steam. Spending on multifamily projects increased 50 percent between May 2011 and this May, and spending on single-family structures increased 15 percent, according to the commerce department.
In the region, the number of residential building permits requested increased 8 percent to 140 in May compared to the same month in 2011, according to the Home Builders Association. It was the second month of year-over-year gains.
Morris, with the Ohio Valley chapter of the builders and contractors association, does not predict large growth in local construction spending this year or next.
Officials said construction hiring should continue this year and next, and demand for building projects should continue to rise at a modest pace.
Blake said 2012 should be the first year since 2006 when U.S. construction spending for the entire year will be up compared to the previous year.
"My forecast for the year is that spending will be up ... somewhere between 3 and 9 percent," he said.
