Total U.S. construction spending fell 0.3 percent in September as private residential building dropped for the sixth month in a row, according to monthly statistics released by the U.S. Department of Commerce.
However, nonresidential construction spending rose 1.1 percent—the sector’s 15th consecutive monthly gain, according to Ken Simonson, chief economist of the Associated General Contractors of America (AGC). According to Simonson, private nonresidential construction has gained 17 percent in the first nine months of 2006 combined, while public construction has risen 10 percent.
Simonson continues, “Of the two big public construction categories, highway and street construction was up 16 percent year-to-date and education had 7 percent pickup,” he says. “Nearly all of these categories should continue growing over the next year. I believe the economy is still fundamentally strong, and the housing slide will have limited impacts on other segments. A bigger concern is that fast-rising materials costs have forced cancellation or delay in many projects. Cost increases should be moderate in the next few months, but materials costs will still outrun overall inflation.”