U.S. construction industry in doldrums -survey

* Construction industry unemployment rate over 22 percent

* Outlook seen grim for 2010

By Andrew Stern

CHICAGO, Jan 20 (Reuters) - A survey of U.S. companies that build highways, buildings and sewers found nine in 10 predicting their business will not rebound in 2010 from depressed levels, a trade group said on Wednesday.

Based on the responses of some 700 contractors across the United States, 88 percent of the firms do not expect overall conditions to improve before 2011 and some will likely go out of business, the Associated General Contractors of America said.

"It means the construction industry is in for another difficult year in 2010," Stephen Sandherr, the trade group's chief executive, said in a conference call.

The industry is widely considered a bellwether for the economy as an indicator of spending on infrastructure, rebuilding and business expansion, and it has a ripple effect in terms of purchases of construction materials and equipment.

In 2009, 73 percent of firms laid off employees, averaging 39 layoffs per firm, and spending declined $137 billion to the lowest level in six years.

The survey found 30 percent of firms predicted they will add staff in 2010, while 27 percent will likely lay off workers, and the rest were unsure.

"Perhaps they can't imagine who else to let go," Sandherr said, noting unemployment in the industry was over 22 percent.

The roughly $135 billion federal government stimulus money aimed at bolstering the industry gave some one-third of contractors a lifeline, Sandherr said. But he predicted some will go out of business this year with stiff competition for fewer contracts causing them to bid at below cost.

"We never saw the stimulus as a panacea for all that ails the construction industry. We saw it as a primer for the pump," Sandherr said, adding a second stimulus bill under consideration in Washington was sorely needed.

Costs for construction materials were at historic lows, relatively speaking, which could encourage new business, the trade group's chief economist, Ken Simonson, said.

Government statistics showed the index for construction inputs such as concrete and diesel fuel rose 0.4 percent over the past year, though the index had been falling earlier in the year meaning prices were rising again, Simonson said. (Editing by Bernard Orr)