Strong Construction Spending Rebound in April
as Stimulus Funding and Residential Construction Drive Demand
June 2, 2010
Construction spending rebounded in April, with an increase of 2.7
percent or $23 billion from March to a seasonally adjusted annual
rate of $869 billion according to the latest analysis of federal
spending figures released by the Associated General Contractors
of America. The association noted that the gains were primarily
driven by private residential construction (up 4.4 percent) and
public construction (up 2.4 percent), but that private nonresidential
also increased significantly (up 1.7 percent).
"The stimulus is clearly driving one of the biggest increases
in construction spending the industry has experienced in a long
time," said Ken Simonson, chief economist for the construction
trade association. "Once you look beyond the stimulus, however,
these figures show how uneven and fragile the construction recovery
Simonson noted that the stimulus drove significant increases in
a range of public construction categories. In contrast, public educational
construction spending, which received little stimulus support, only
edged up 0.4 percent for the month and was 18 percent lower than
a year earlier.
Private nonresidential spending was boosted by strong gains in private
power construction ($3.9 billion, 5.2 percent for the month); manufacturing
($1.5 billion, 2.7 percent); and communication ($1.3 billion, 7.3
percent). Meanwhile, developer-financed categories, which are plagued
by high-vacancy rates and tight credit conditions, continued to
tumble. Private lodging construction rose 0.8 percent for the month
but was down 61 percent compared to April 2009; commercial (retail,
warehouse and farm) was down 2.9 percent and 37 percent; and private
office was down 1.7 percent for the month and 36 percent for the
Private residential construction figures were also mixed, Simonson
said. New single-family construction climbed 3.4 percent for the
month and 29 percent year-over-year, and improvements to existing
single- and multi-unit construction rose 6.3 percent and 4 percent
from a year earlier. But new multi-family construction-condos and
rental buildings, which are developer-financed -slumped 1.9 percent
in April and 57 percent compared to a year ago.
"Assuming the economy continues to expand, privately-funded
construction should experience a rebound starting in 2011,"
Simonson noted. "But for now stimulus funding remains the main
source of support for nonresidential contractors."
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