Fewer contractors plan to purchase construction equipment and hire new staff in 2010, following a year of near-record layoffs in the construction industry.

And though the federal stimulus package has been a relative bright spot in the industry, bolstering confidence and increasing expectations in the public construction sector, privately funded construction activity is likely to decline even further this year.

According to the construction employment and business outlook forecast released by the Associated General Contractors of America on Wednesday, nearly nine in 10 contractors say there will be no recovery in 2010.

“Unfortunately for the industry and for our economy, this year’s construction outlook is far from positive,” said Stephen Sandherr, the association’s chief executive officer. “As long as the construction industry remains mired in its own depression, broader economic and employment growth will continue to lag.”

The forecast, which is based in part on survey responses from about 700 construction firms submitted in late December and early January, indicates that 64 percent of respondents expect demand for new manufacturing facilities to dwindle this year and 71 percent predict demand for new retail, warehouse and lodging facilities will fall.

As a result, the number of firms expecting to buy new equipment is down to 46 percent this year from 61 percent in 2009, and 60 percent say they are uncertain whether they will hire or lay off more workers.

“Perhaps they can’t imagine who else to let go,” Sandherr said, adding that construction workers accounted for 22 percent of non-farm layoffs last year.

In 2009, 73 percent of firms said they were forced to make job cuts, with an average of 39 layoffs per firm. In Iowa, 59 percent of respondents said they laid off workers in 2009, and at least 24 percent plan to make cuts this year.

Meanwhile, 81 percent of firms are already slashing profit margins in their bids to stay competitive, and more than 10 percent say they are now submitting bids so low they will actually lose money on the projects. Eighty-nine percent of Iowa contractors surveyed say they have adjusted bids in 2009 so that profits are smaller, the report said.

Contractors, however, are relatively upbeat about prospects for power, medical and higher education construction, with 52 percent expecting demand for power facilities to be at or above 2009 levels and 57 percent expecting growth or stability in demand for hospital and higher education construction.

Eighty-eight percent of construction firms surveyed don’t foresee overall business conditions recovering until 2011 at best.