Construction Spending Falls to Lowest Level in Seven Years, Driven by Nonresidential and Public Construction Declines
March 2, 2010

Construction spending in January fell by $5.5 billion to $884 billion, its lowest level since June 2003, according to an analysis of new federal figures by the Associated General Contractors of America. Declining investments in private-sector non-residential construction and public construction at all levels of government drove the 0.6 percent decline, the association's chief economist Ken Simonson noted.

"What's clear from this data is that the downturn in nonresidential construction spending is far from over," Simonson says. "Federal funding for construction is one of the few crutches propping up a deeply wounded construction industry."

Simonson says that private, nonresidential construction spending declined by 2.1 percent between December and January, and by 20 percent over the past year. Power construction was the only private nonresidential construction category to increase over the past year, by 16 percent, while most other categories declined by double digits, he adds.

According to Simonson, the two major categories of federally-driven transportation spending, public highway and street construction and other transportation construction, increased by 6 and 18 percent, respectively. In addition, direct federal construction spending increased 1.9 percent in January and 13 percent over the past 12 months to a record $31 billion.

"Federal funding has been giving contractors the lifeline they need to stay in business," says Simonson. Many construction jobs are now at risk, however, because the federal transportation program expired February 28.

Association officials have urged Congress to act quickly to renew the federal transportation program. "Thousands of construction workers are counting on Congress to fix this problem before they and the entire economy are made to suffer," says Stephen E. Sandherr, the association's chief executive officer.

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