Construction Spending Up in June
August 2, 2011

By Sahely Mukerji

Officials at the U.S. Census Bureau of the Department of Commerce announced August 1 that construction spending during June 2011 was estimated at a seasonally adjusted annual rate of $772.3 billion, or 0.2-percent above the revised May estimate of $770.5 billion, according to an August 1 release. The June figure is 4.7 percent below the June 2010 estimate of $810.4 billion.

"GANA and its members are very happy to see this extended increase in construction spending, especially in the commercial sector," says Brian Pitman, director of marketing and communications for the Glass Association of North America in Topeka, Kan. "While the economy isn't close to being out of the woods yet, it is gratifying to see a light at the end of the tunnel. A rebound in commercial construction projects gives our industry much needed opportunity for recovery."

During the first six months of this year, construction spending amounted to $357.5 billion, 5.4 percent below the $377.9 billion for the same period in 2010, according to the release.

Spending on private construction was at a seasonally adjusted annual rate of $493.4 billion, 0.8 percent above the revised May estimate of $489.6 billion. Residential construction was at a seasonally adjusted annual rate of $235.8 billion in June, 0.3-percent below the revised May estimate of $236.5 billion. Nonresidential construction was at a seasonally adjusted annual rate of $257.7 billion in June, 1.8-percent above the revised May estimate of $253.1 billion.

"The monthly spending figures have been like a roller coaster for some time now and that is likely to continue in the near term," comments Chris Dolan of Guardian Glass. "That makes it more important than ever to have a long-term view with a strategy to match. We continue to work with our customers and the channel - the fabricators, contract glaziers and architects - to share project information and advanced system solutions. We pay attention to the monthly metrics, but don't get all caught up in them."

“We’ve definitely experienced an improvement in commercial construction conditions this year,” says John Dwyer, president of Syracuse Glass in Syracuse, N.Y. “Since February of this year we’ve been substantially ahead of last year, and in July we had our best sales month in our company’s 101-year history … We usually see an up-tick for the school construction season at the beginning of the summer. K-12 schools and universities are big glass users in our trading areas. In addition to the schools, hospitals are actively building, and we’ve seen some new office building construction again, too.”

Ken Simonson, chief economist, Associated General Contractors of America (AGC) in Arlington, Va., commented in an August 1 release, "Private nonresidential construction is rebounding, thanks to renewed investments in power, manufacturing, and warehousing and distribution facilities. A small rise in homebuilding also helped overall spending rise for the third month in a row, although decreases in multifamily and residential improvements pulled down total private residential construction by 0.3 percent. Meanwhile, public construction shrank 9.6 percent since June 2010, and appears headed down further."

In June, the estimated seasonally adjusted annual rate of public construction spending was $278.9 billion, 0.7 percent below the revised May estimate of $280.9 billion, according to the DOC release. Educational construction was at a seasonally adjusted annual rate of $66.4 billion, 4.1 percent below the revised May estimate of $69.3 billion. Highway construction was at a seasonally adjusted annual rate of $74.6 billion, 1.6 percent below the revised May estimate of $75.8 billion.

"Cutting public investments in infrastructure and construction will offset recent gains in private sector activity," said Stephen E. Sandherr, chief executive officer of AGC, in the AGC release. "Worse, it will put taxpayers on the hook for even greater expenses down the road as infrastructure deteriorates and costly repairs are required."

Click here for a related story.

Need more info and analysis about the issues?
CLICK HERE to subscribe to USGlass magazine.