Total construction spending in the
However, nonresidential construction rose 0.6 percent, the 10 consecutive monthly gain. “Nonresidential construction shrugged off the turmoil in homebuilding and credit markets in July to post another solid gain,” says Ken Simonson, chief economist for the Associated General Contractors of America (AGC), commenting on the Census Bureau’s report. “For the first seven months of 2007 combined, total construction was down 3.4 percent and residential plummeted 18 percent compared to the same period in 2006. Those figures obscure the 15 percent jump in nonresidential spending.
“Private nonresidential construction—the type that might seem most vulnerable to credit pullback—showed no sign of contagion, rising 0.4 percent in July and 17 percent year-to-date,” Simonson continues. “The three most speculative components—commercial, office and lodging—all advanced. The two biggest commercial sub-components—multi-retail (big box and other general merchandise stores, shopping centers and malls) and warehouses—both leaped 4 percent in July and 28 percent year-to-date. Private office construction climbed 0.6 percent and 22 percent, and lodging shot up 0.8 percent and 60 percent.”
Other strong gains included power, which was up 0.5 percent and 19 percent year-to-date, according to Simonson. Private health care also saw an increase of 1.3 and 13 percent, respectively. “I anticipate these categories will remain vigorous, but I expect credit-sensitive types such as office, warehouse, retail and lodging to slow down soon,” he says.
Public construction was up 0.7 percent in July, with subcategories like education posting a gain of 1.9 percent, while highway and street construction fell 0.8 percent. “Partly, that reflects lower prices for diesel and asphalt, but it also shows states are running short of highway funds as gas tax receipts slow,” Simonson says.
More information is available at www.agc.org.