ACHRNEWS

Construction Shifts

December 1, 2008

ARLINGTON, Va. - Economic numbers are dipping across the board as the United States, among other nations, endeavors to rebalance its shifting economy. The HVAC and construction industries are not immune to the resettling as is evidenced by the numbers that were released reporting September’s status.

According to the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) the combined U.S. factory shipments of central air conditioners and air-source heat pumps for September totaled 420,726, down 20 percent compared with the same month a year ago.

For the year-to-date, combined shipments totaled 5,037,412, a 5 percent drop compared with the same period last year.

Heat pump shipments totaled 137,298, down 12 percent from the same month a year ago. For the year-to-date, heat pump shipments totaled 1,550,137, a 0.4 percent drop compared with the same period last year.

Measured before the peak of the heating season, U.S. factory shipments of gas-fired, warm-air furnaces in September totaled 249,550, a 17.5 percent drop compared with the same month a year ago. Oil-fired, warm-air furnaces for the same month totaled 7,819; a 33 percent drop compared with September 2007 totals.

For the year-to-date, gas furnace shipments totaled 1,682,405, a 17.4 percent drop compared with the same period last year. Oil furnace shipments for the year-to-date totaled 40,903, a 27.6 percent drop compared with the same period last year.

The construction market is working to balance itself as well. Nonresidential construction was posting record gains in 2007 and the beginning of 2008, but the pace has begun to drop off over the past few months. According to Ken Simonson, chief economist for the Associated General Contractors of America (AGC), “Nonresidential construction is on the verge of a potentially long slide.” His comments were reported in a press release following reports from the Census Bureau on construction spending in September and the National Association for Business Economics (NABE) on third-quarter and expected activity.

“The Census figures show nonresidential spending eked out a gain in September of 0.1 percent,” Simonson noted. “But private nonresidential spending was down nearly 1 percent from its high-water mark in June, while public spending tumbled 1.3 percent in September alone.”

Simonson also pointed out that, based on information he has been gathering, contractors are reporting that many projects have been put on hold due to the credit freeze and the weakening demand for stores, offices, and other facilities. The problem was further compounded by multiple states postponing construction bond issues or deferring budgeted projects in order to meet balanced-budget mandates.

“The NABE survey, conducted October 10-23 among corporate economists, found that companies are on balance plans to trim spending on structures in the next 12 months,” he said. “That’s a reversal from the July survey.

Simonson encouraged developers that in spite of current economic issues, now may be a prime time to continue building projects.

“This is a great time for both public agencies and private owners to go ahead with construction,” he said. “Many materials costs have tumbled since last summer, and there are plenty of skilled contractors ready to bid for work.”

Publication date: 12/01/2008