LOOKING at construction from a local perspective, 2002 seemed busy indeed. Traffic moved at a crawl in the vicinity of our office through much of the year due to several street and highway expansion projects. Construction at the two Houston (Texas) airports seemed unending. A new football stadium was completed just in time for the 2002 NFL season, and work is underway on a new basketball/hockey arena.
We realize that our Houston experience may not have been the norm for the rest of the country. Declining tax revenues and a sluggish economy had a negative impact on the number and extent of construction projects in some areas. Still, we saw and experienced plenty of construction activity while driving around the country last year.
Overall, it would appear that construction activity in 2002 grew a little bit from the previous year. That was still quite a lot of activity, though, and it meant that many thousands of loads of asphalt, cement, and other construction-related materials were transported.
Modest increases in highway construction were recorded for the year. Through October 2002, the value of construction work performed on highway and bridge projects was $46.5 billion, up about a tenth percent compared with the same period in 2001. In contrast, the housing sector was red hot in 2002, with record sales of both new and used homes.
The year certainly finished strong. The latest data from Dow Jones Newswires and CNBC show that total construction spending rose 0.3% in November 2002, the fourth straight month of construction spending increases. Total construction spending for the year grew by about 0.8%, according to the Dow Jones/CNBC report.
The increase was fueled by a 0.9% gain in November in the residential sector. November public construction rose by 1.5%. Non-residential private construction was down slightly.
The outlook for 2003 seems even rosier. Data collected for our 2003 Construction Forecast suggests a moderate pick up in activity this year. US tank truck fleets should see a rebound in commercial construction, while home building and public works hold steady. Construction activity also should be strong in Canada and Mexico.
Domestic US highway construction should grow 2% to 3% this year, according to the American Road & Transportation Builders Association. A key factor will be record levels of federal investment generated by the Transportation Equity Act for the 21st Century (TEA-21).
Also under TEA-21, Congress is expected to provide $7.2 billion for mass transit programs, a 7% increase over the fiscal year 2002 level. Increases in federal funding for transit under TEA-21 should sustain construction of subway and light rail systems in 2003.
Airport construction is in line for significant federal funding in 2003. Congress is expected to provide the full $3.4 billion outlay for the Airport Improvement Program as was promised in the Aviation Investment and Reform Act for the 21st Century.
All of this should add up to a reasonably successful year for cement and asphalt fleets. That's pretty good news in an economy that continues to struggle.