For the first time since March 2009, private nonresidential construction spending increased 1.7 percent in April, according to the June 1 report by the U.S. Census Bureau. However, on a year-over-year basis, private nonresidential construction spending is down 24.6 percent.
For the first time since March 2009, private nonresidential
construction spending increased 1.7 percent in April, according to the June 1
report by the U.S. Census Bureau. However, on a year-over-year basis, private
nonresidential construction spending is down 24.6 percent. Total nonresidential
construction – which includes both private and public – is up 2 percent for the
month, the second consecutive monthly increase. Since April 2009, total nonresidential
construction spending is down 16.1 percent and now stands at $596.9 billion.
Twelve of 16 nonresidential subsectors posting increases in
April include conservation and development, up 9.5 percent; water supply, 8
percent higher; communication, up 7.3 percent; and amusement and
recreation-related construction, 6.7 higher. Three subsectors have increased
since April 2009 including transportation, up 17.7 percent; conservation and
development, up 10.4 percent; and highway and street, 5 percent higher.
In contrast, four construction subsectors showing spending
decreases for the month were public safety, down 4.7 percent; commercial
construction, 3.3 percent lower; educational, down 0.3 percent; and
transportation-related construction, down 0.1 percent. Those subsectors with
the largest decreases since April 2009 included lodging construction, down 59.7
percent; commercial construction, 36.8 lower; manufacturing construction, down
31.1 percent; and office construction, down 29.4 percent.
Residential construction spending was up 4.5 percent for the
month and 4.6 percent higher from April 2009 levels. Public construction was up
2.4 percent for the month, but down 4.4 percent compared to April 2009.
Overall, total construction spending – which includes both residential and
nonresidential – was 2.7 percent higher in April 2010, making it the third
consecutive monthly increase, but was down 10.5 percent compared to the same
period one year ago.
“Today's report represents a reversal of numerous trends,”
said Associated Builders and Contractors Chief Economist Anirban Basu. “In
recent quarters, nonresidential construction spending has been fueled by
publicly-financed projects, many of them in the transportation category.
However, in April, transportation-related spending was essentially flat, an
indication that the impact of stimulus spending in that category may have
peaked and that other nonresidential construction segments will need to expand
if the overall construction industry's momentum is to continue.
“On a year-over-year basis, the nonresidential segments that
have expanded are all closely tied to the stimulus package passed in February
of 2009. These are transportation, conservation and development and
highway/street construction,” said Basu.
“The generally upbeat report also highlighted several
vulnerabilities that remain. For example, conventional wisdom suggests that
state and local government-financed construction will decline going forward as
lower levels of government seek to shrink their collective balance sheets,”
Basu said. “This is consistent with observed monthly declines in spending in
the education and public safety categories. Privately-financed construction
also remains generally weak, with lodging related construction down approximately
60 percent on a year-over-year basis. This indicates that the construction
industry has a way to go before fully recovering to activity levels seen before
the economic downturn.”