March 3, 2010

U.S. construction spending dropped by $5.5 billion in January

U.S. construction spending in January fell by $5.5 billion to $884 billion, the lowest level since June 2003, according to an analysis of new federal data 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 per cent decline.

“What’s clear from this data is that the downturn in nonresidential construction spending is far from over,” said AGCA chief economist Ken Simonson.

“Federal funding for construction is one of the few crutches propping up a deeply wounded construction industry.”

Private non-residential construction spending declined by 2.1 per cent between December and January, and by 20 per cent over the past year.

Power construction was the only private non-residential construction category to increase over the past year, by 16 per cent, while most other categories declined by double digits.

Two major categories of federally-driven transportation spending, public highway and street construction, and other transportation construction, increased by 6 and 18 per cent respectively.

Direct federal construction spending increased 1.9 per cent in January and 13 per cent over the past 12 months to a record $31 billion.

“Federal funding has been giving contractors the lifeline they need to stay in business,” Simonson said.

Many construction jobs are now at risk, though, because the federal transportation program expired yesterday, the AGCA notes.

“Without federal funds, total spending on highway and transportation projects is sure to plummet this year,” Simonson said.

-RCD Digital Media

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