Construction Spending Stumbles Again in May; Stimulus Provides Only Bright Spot for Nonresidential, AGC Says
July 2, 2010

Construction spending shrank again in May, dropping 8 percent from a year earlier, although homebuilding and stimulus-funded public works increased from year-ago levels, according to an analysis of new Census Bureau data by the Associated General Contractors of America (AGC).

"Stimulus has made a difference, but Congress needs to provide long-term funding for transportation and water projects to assure further economic growth," said Ken Simonson, chief economist for the AGC. "Private nonresidential construction sagged 25 percent from May 2009 to May 2010, while public construction edged down 3 percent, and private residential construction rose 11 percent. Federal stimulus funds helped keep public construction afloat and buoyed single-family construction."

According to Simonson new single-family home construction in May soared 31 percent from the depressed levels of a year earlier, but new multi-family construction-condos and rental housing-tumbled 57 percent. "The first-time home buyer tax credit that expired at the end of April boosted demand for single-family and lessened demand for multi-family," Simonson said. "Those distortions have now ended, although Congress voted to extend the closing deadline until September 30 for families that had signed contracts by April 30."

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