By Eric Jay Toll
Arizona Builder’s Exchange
With more than $3.4B in taxable construction activities, Summer and Fall 2012 started the fiscal year with sales up 1.2 percent over the same period in 2011. The construction sales reported by the Arizona Department of Revenue (ADOR) follows the national trend with July and August jumping 6.1 percent each over 2011 figures. September and October—similar to the Associated General Contractors-reported national trend analysis—showed declines of 3.0 and 3.8 percent over the previous year.
Although Arizona data is not yet available, the AGC reports that nationally, November construction activity slipped below October—even though it was ahead of 2011. If Arizona follows this trend, November figures for statewide construction activity may show a third month of slight decline.
Summer Activity Shows Big Bounce
Summer contracting activity outpaced all other categories of taxable sales with its more than 6 percent gains, compared to 4.4 and 2.5 percent increases in total State revenue growth. The September swoon, however, didn’t keep up with the Arizona economy’s gains of 3.8 percent in September and a slight increase, 0.5 percent, in October. Overall, total taxable economic activity was up 2.8 percent for the four month period in Arizona with construction just over one percent.
The increases in July and August continued the overall construction trends from Fiscal Year 2011-12. ADOR showed construction activity up 6.2 percent for the last half of the year ending June 30, 2012 (AZBEX, October 26). When Fiscal 2012 closed, builders and analysts told AZBEX that most were expecting increases in Fiscal 2013, but not significant jumps in activity dollars. The first four months seem to hold true to that expectation.
Local Fall Decline Counters National Trend
The AGC reports nationally construction spending in October jumped 9.6 percent over 2011 (AZBEX and AGC). In November, activity increased 7.7 percent over 2011’s dollars, but was 0.3 percent less than October 2012. Comments to AZBEX about Fiscal 2012-13 are consistent with actual results when ADOR releases its reports, November and December should also show declines from the same periods in 2011. This would put the first half of the fiscal year as flat or slightly above Fiscal 2012 spending.
Actual data for November and December won’t be released before late February or early March, according to an ADOR official.
From early reports, total state revenues appear to be running slightly ahead of budget projections.
Nationally, AGC reports that all market segments – except public construction – are showing gains. Residential spending is up 29 percent for single family and 46 percent for multifamily units when compared to 2011. Nonresidential construction is up 8.6 percent over last year. AGC has been reporting that an end-of-year slowdown in nonresidential is expected to end.
“With the passage of the tax bill,” AGC economic Ken Simonson projects that private development “should be encouraged to go ahead with projects held in reserve.”
