September 9, 2010

July sees drop in U.S. construction spending

WASHINGTON, D.C.

An Associated General Contractors of America analysis of Census Bureau data found that construction project investments dropped one per cent in July, to an annualized US$805 billion.

“While the stimulus is funding some vital infrastructure projects, the private sector is too cautious and state and local governments are too cash-strapped to help,” AGC chief economist Ken Simonson said in a statement.

“Overall construction spending is at its lowest level in a decade, and hundreds of thousands of construction workers are unemployed.”

The July total was down 11 per cent from the past 12 months and one-third lower than the high-water mark set in February 2006, he adds, noting that spending declines were observed in all 12 private non-residential construction categories and 10 of the 14 public categories.

The association officials noted that the new figures show depressed private sector activity and local and state budget cuts are offsetting stimulus–funded construction spending.

Stimulus funds appear to have buoyed public housing (up 18 per cent from July 2009 to July 2010), sewage and waste disposal (up 11 per cent), and water supply construction (up 0.7 per cent), while reconstruction work around New Orleans helped conservation spending rise 12 per cent, Simonson suggested.

However, stimulus spending on highways and other transportation facilities was evidently not enough to offset the downturn in state and local budgets, leading these categories to contract by seven per cent and one per cent, respectively, from year–earlier levels, added Simonson.

Private non-residential spending plunged 24 per cent from July 2009 to July 2010 with double–digit declines in nearly all categories.

Private power construction reached the highest monthly level this year but manufacturing and developer–financed categories such as office, hotel and retail construction appear to be heading for still less activity.

DCN NEWS SERVICES

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