“We have known for some time that growth in construction volumes would shift from publicly financed construction to privately financed construction.” —ABC Chief Economist Anirban Basu.
Private nonresidential construction spending increased 0.9 percent in February, according to the April 1 report by the U.S. Census Bureau. However, despite February’s monthly performance, private nonresidential construction spending is down 13.2 percent from the same time last year. Total nonresidential construction spending – which includes both privately and publicly financed construction – stood at $523.2 billion in February, down 0.2 percent for the month and down 6.3 percent from February 2010.
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Six of the sixteen nonresidential construction sectors posted gains in spending on a monthly basis in February, including conservation and development, up 11.3 percent; manufacturing, up 5.4 percent; and power, up 2.5 percent. Five subsectors posted increases from the same time last year, including conservation and development, up 32.4 percent; highway and street, up 10.6 percent; and water supply construction, up 6.8 percent.
Those nonresidential construction sectors posting decreases for the month include water supply, down 5.9 percent; religious-related, down 3.8 percent; and educational construction, down 3.4 percent. The sectors with the largest year-over-year decreases include lodging, down 42 percent; manufacturing, down 30.1 percent; and office construction, down 19.9 percent.
Public nonresidential construction spending slipped 1.1 percent for the month, but is up 0.4 percent from one year ago. Residential construction spending fell 3.8 percent in February and 7.8 percent compared to the same time last year. Overall, total construction spending was down 1.4 percent in February and down 6.8 percent from February of last year.
“Reading today’s report, signs of transition with the nation’s construction industry have become increasingly apparent,” said Associated Builders and Contractors Chief Economist Anirban Basu. “We have known for some time that growth in construction volumes would shift from publicly financed construction to privately financed construction.
“As the impact of federal stimulus wanes, and the broader economy continues to recover at a respectable clip, the volume of privately financed construction is now edging higher,” said Basu. “However, for the time being, that slender growth is being more than offset by decreases in publicly financed construction, including projects financed by state and local governments.
“This pattern is likely to continue into the summer. Demand for privately financed construction will probably expand only gradually due to an excess supply of hotel rooms, office space, retail space and industrial space in many markets,” Basu said. “In contrast, the recent decline of construction activity in segments heavily financed by state and local governments will likely continue on that path.”