Stimulus Money Helps Construction Spending Post Small Gain in June

Despite gain, the Associated General Contractors of America says contracts continue to struggle.

August 5, 2010
CDR Staff
Forecasts & Statistics Demolition

According to a recent report by the Associated General Contractors of America (AGC), Arlington, Va., construction spending increased by 0.1 percent in June as gains in stimulus-aided public categories offset decreases in homebuilding and private nonresidential spending.

In analyzing data from the U.S. Census Bureau, Ken Simonson, chief economist of the AGC, notes, “Stimulus dollars are supporting construction jobs, but the pain is continuing for most contractors and their workers who depend on private projects or school construction.”
Simonson notes that the modest improvement was in light of a 1.5 percent increase in public construction, which offset declines of 0.8 percent in private residential construction and of 0.5 percent in private nonresidential spending. “Every private category was negative, most deeply so, compared to June 2009,” Simonson adds. “But there were encouraging gains for the month in private hospital and power construction, both of which should be growth markets over the next several quarters.”
Areas of strength included highway and wastewater construction, each of which increased for the fourth consecutive month; other public transportation facilities—transit, rail and airports—increased by 20 percent from a year earlier; and public housing jumped 31 percent compared to June 2009.
“All of these categories have benefited from stimulus funds. In contrast, public primary and secondary school construction, which has been battered by falling property tax receipts and lower in-migration to formerly fast-growing school districts, shrank 27 percent in the past year,” Simonson says.
With the overall construction industry still struggling, Stephen Sandherr, the AGC’s CEO, is calling on Congress and the White House to quickly enact legislation to provide long-term funding for public infrastructure spending and for private construction. “It is deplorable that the airport trust fund is now on its 14th short-term extension, the highway and transit trust fund is in danger of shutting down on Dec. 31 and there is no trust fund to sustain vitally needed water infrastructure upgrades,” Sandherr says. “Meanwhile, uncertainty over the future of major tax provisions and new financial rules are keeping investors on the sidelines, further depressing private construction.”