Construction spending nears decade-long low

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The Associated General Contractors of America noted drops in nearly all private nonresidential categories offset small public gains, in an analysis of new Census Bureau data. Construction spending slumped 0.7 percent from $798 billion in December to $792 billion in January, the second-lowest seasonally adjusted annual rate since July 2000. Association officials noted that nearly every private nonresidential category plunged, offsetting pickups in some residential and public nonresidential segments. They added that since January 2010, construction spending has declined by 5.9 percent.

“These discouraging figures show that millions of construction workers and their firms are still suffering from the economic downturn, despite a year and a half of growth in the overall economy,” said Ken Simonson, the association’s chief economist. “Other than an uptick in the construction of truck terminals and railroad facilities, private sector demand for construction remains extremely low.”

Simonson noted that private nonresidential construction sank 6.9 percent from December and 13.2 percent from January 2010 levels. He added that the figures for public construction were more positive, up 0.1 percent for the month and 2.9 percent for the year, largely thanks to ongoing federal spending for stimulus, military base realignment projects and hurricane prevention and recovery work. He warned, however, that much of this temporary work would dry up later this year. As a result, Simonson predicted that public construction spending was likely to decline in 2012, if not sooner.

Association officials urged leaders of the 112th Congress to act quickly so that federal programs to invest in transportation and water infrastructure do not lapse. Stephen E. Sandherr, the association’s chief executive officer, noted that federal highway, transit and airport funding could expire this month, throwing thousands of construction workers out of jobs. “The last thing taxpayers need is the extra cost of adding thousands to the unemployment rolls and the penalties associated with walking away from half-completed construction projects,” Sandherr said. Read More.

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