Construction Marches On

Total construction spending in the U.S. rose again in March following an upward revision for February as single-family homebuilding held steady and nonresidential construction boomed, according to Ken Simonson, chief economist for the Associated General Contractors of America (AGC), commending on the April 30 construction spending report from the U.S. Census Bureau.

“Total construction spending rose 0.2 percent in March, seasonally adjusted, while the gain for February was revised from 0.3 percent to 1.5 percent,” says Simonson. “New private single-family construction edged up 0.1 percent for the month, though it was down 27 percent from a year ago. The next largest category, the hard-to-measure residential improvements, more than reversed a big February gain, but were still 19 percent head of March 2006. New multifamily construction showed modest gains for both periods—up 0.2 percent for the month and 1.5 percent year-over-year.”

Simonson continues, “Private nonresidential construction surged another 2.4 percent for the month and 17 percent year-over-year. All 11 of the Census Bureau’s categories were up for the month and all but religious structures were up from March 2006. Categories or subcategories that did even better compared to March 2006 included lodging, up 59 percent; offices, 31 percent; the multi-retail portion of commercial, 23 percent; electric power, 22 percent; communication, 20 percent and hospitals, 18 percent.

“Public construction was up 0.4 percent from February and 9 percent from March 2006,” Simonson says. “The two big public categories—highways and streets, and education—were 11 percent and 9 percent higher than a year before, respectively. The next largest public category, transportation facilities, was up 8 percent despite a big drop this March.”

Simonson says he expects private gainers to be power and energy related projects for 2007 as a whole. “The office market may cool if sluggish overall economic growth causes big firms to slow hiring of office employees and the small-office market, along with some retail construction, will be dragged down by a continuing steep decline in new single-family construction. Public construction should remain modestly positive, but will be pressured by rising costs for construction materials and components,” he says.

More information is available at www.agc.org.