NEW MEASURES NEEDED TO STEM CONSTRUCTION CRISIS AS NEW FIGURES SHOW DECLINE IN NONRESIDENTIAL CONSTRUCTION SPENDING
August Data Shows Fourth Consecutive Drop, in Contrast to Housing Rebound
New figures showing an almost 5 percent increase in spending on single-family homebuilding and residential improvements mask the fourth consecutive monthly slide in nonresidential construction, a leading industry economist said today. Ken Simonson, chief economist for the Associated General Contractors of America, noted that spending on nonresidential construction projects declined in August by $3 billion, bringing the cumulative drop since August 2008 to $34 billion or 4.7 percent. "As welcome as increased spending on residential construction is, there remains little relief in sight for the nation's commercial construction industry,' Simonson said. "These figures are yet another reminder of the urgent need to expedite stimulus funding and encourage new private investment in construction." Noting that the association released a comprehensive blueprint for economic growth, "Build Now for the Future," on September 30, Simonson said the new spending figures underscored the need for federal action. He said the plan include a mix of pro-growth tax credits and incentives designed to boost private sector activity, while calling for new investments in the nation's infrastructure and public facilities. Simonson said that, according to Census Bureau data released today, private nonresidential construction spending has been dropping since March and was more than 10 percent lower in August than a year earlier. Only two categories showed year-over-year gains: power construction, up 11 percent, and manufacturing construction, up 31 percent. "I expect power-wind farms, transmission lines and environmental retrofitting of power plants-to be the only source of growth for private nonresidential construction in the next few months," Simonson predicted. The two largest public categories both increased modestly compared to August 2008, Simonson added. The biggest, educational construction, was up 1.8 percent for the year but unchanged from July on as seasonally adjusted basis, while highway and street construction rose 3.1 percent for the year and 0.8 percent from a month earlier. "The highway increase reflects the quick awarding of stimulus contracts by state transportation departments," Simonson noted. He added, though, that other categories, including water and sewer spending, which dropped 5.2 percent and 0.7 percent respectively in August, continue to suffer from delays in awarding stimulus funds. "The best news in this report is clearly that breakthrough in single-family homebuilding," Simonson concluded, noting that the category grew 4.5 percent in August and is up 17 percent since touching bottom in May. Click here for more information about "Build Now for the Future."