Nonresidential Construction Shows Momentum

Nonresidential construction spending grew in July, although not enough to offset the continued decline in residential building. “Nonresidential construction spending continued growing in July, despite the weak economy and housing slump,” says Ken Simonson, chief economist of the Associated General Contractors of America (AGC), commenting on the monthly statistics released by the Census Bureau. “But Congress must act promptly to avert layoffs in power and highway construction.

“Although the headline figure showed a drop of 0.6 percent in total construction put in place in July, the bad news was limited to residential spending, which tumbled 2.1 percent,” Simonson continues. “The report included a huge upward revision in June and May nonresidential spending, and yet the July figure was still 0.2 percent higher than the new June total.”

Year-to-date, total nonresidential spending through July was 14 percent ahead of last year’s total, with 15 of the 16 Census categories on the rise.

“The most robust category so far this year has been manufacturing, which jumped 46 percent, thanks to some massive refinery projects but also steel, cement and other plants,” Simonson says. “However, wind turbine projects will halt soon if Congress doesn’t renew the production tax credit. Another category that needs immediate action from Congress is highway funding. The steep drop in gas tax receipts this year means federal highway trust fund payments to states may be delayed as early as next month. If that happens, contractors will be forced to lay off workers by November.”

More information is available at www.agc.org.