Construction Spending Continues to Slip

In a sign that the construction industry is mired in its own recession, private nonresidential construction spending slipped 1.4 percent in August, according to the Oct. 1 report by the U.S. Census Bureau. In addition, private nonresidential construction spending is down 24.2 percent compared to the same time last year. However, total nonresidential construction spending – which includes both privately and publicly financed construction – was up 0.6 percent for the month but down 13.6 percent on a year-over-year basis. Total nonresidential construction spending in August now stands at $562.7 billion.

“In recent days, we have been alerted that the nation’s recession ended nearly sixteen months ago and that the U.S. economy is now in recovery,” said Associated Builders and Contractors  (ABC) Chief Economist Anirban Basu. “However, we continue to witness the familiar pattern of construction spending growth in publicly financed segments as opposed to the ongoing deterioration in privately financed segments

Of the eight nonresidential subsectors posting spending declines in August, power construction was down 2.6 percent; commercial construction dropped 2.2 percent; and communication construction fell 1.8 percent. However, on a year-over-year basis, lodging construction is down 52.0 percent; manufacturing construction is down 35.4 percent; and office construction is down 31.4 percent.

In contrast, eight of the 16 nonresidential construction subsectors posting increases in spending for the month include highway and street, up 5.1 percent; amusement and recreation, up 4.3 percent; and sewage and waste disposal construction, up 4.3 percent. Four subsectors had increases in construction spending compared to August 2009 including conservation and development, up 18.3 percent; sewage and waste disposal, up 18.1 percent; and water supply construction up 7.4 percent.

Meanwhile, residential construction spending was flat in August and down 0.6 percent year-over-year. Total construction spending – which includes both residential and nonresidential construction – edged up 0.4 percent in August, but is down 10 percent from the same time last year.