Nonresidential Construction Declines as Stimulus Dollars Trickle Out to Contractors

An analysis of federal construction spending data by a leading construction economist showed downturns in multi-family construction and both private and public nonresidential construction swamped a strong upswing in single-family homebuilding in July. According to that analysis of U.S. Census Bureau data, total construction spending fell 0.2 percent, seasonally adjusted from a downwardly revised June total.

Ken Simonson, chief economist for the Associated General Contractors of America says that “We know from contractors’ reports that stimulus money is beginning to flow, but what should be a torrent by now is only a trickle in most categories.”

Simonson noted that public nonresidential spending dropped 0.8 percent from June to July; the only significant exception was in water supply projects, where spending increased 3.7 percent, following a 6.8 percent increase in June.

Additionally, private nonresidential spending declined for the fifth month in a row, falling 2.2 percent in June and another 1.2 percent in July. Developer-financed categories experienced the most acute losses, with lodging down 8.4 percent for the month, office down 1.7 percent, and commercial down 1.7 percent. Manufacturing construction, however, rose 0.9 percent for the month, and power construction declined 0.8 percent in July but increased 10 percent from the previous year. New multi-family construction dropped 3.3 percent for the month and 37 percent compared to last year.

“Given that private construction will continue shrinking for several more months, public agencies charged with spending stimulus funds on construction must do so as promptly as possible,” says Simonson.