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U.S. Construction Spending Slightly Rises in September Despite Public-Sector Drops

Thursday, November 3, 2011

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Construction spending in the U.S. increased 0.2% between August and September, but is down by more than $10 billion for the year as public spending declines, according to the latest data issued from the U.S. Census Bureau of the Department of Commerce.

Photo courtesy Associated General Contractors of America

Construction spending is down by more than $10 billion for the year.

The total, seasonally adjusted annual construction spending rate in September was $787.2 billion, compared to $786.0 billion in August, and $797.3 billion in September 2010.

The Associated General Contractors of America said that growing declines in public sector activity continue to offset modest increases in private sector demand for construction.

Private construction spending climbed 0.6% between August and September from $499.0 billion to $501.8 billion, and is up 3.9% compared to last year. Moreover, public construction spending went from $287.0 billion in August to $285.3 billion in September, a 0.6% decrease, and is down by 9.2% compared to last year.

Spending on health care construction experienced the largest private sector increase during the past month (3.5%), while spending on office construction declined by more than any other sector of private construction (0.8%). Residential private construction saw an increase from $234.7 billion in August to $236.3 billion in September.

However, publicly-funded power construction activity increased by 2.5% during the past month while investments in conservation (down 8.3%), transportation (down 4.7%), and public safety (down 4.5%) experienced large dips.

“In less than a year’s time, the public sector has gone from propping up the construction industry to holding,” said the association’s chief economist, Ken Simonson. “Even as local and state budgets continue to contract, the federal government is winding the stimulus and base realignment programs down and cutting billions from key water and facility investment programs.”

Association officials said that instead of cutting infrastructure investments, federal officials “should work to shore up, or create new, trust funds that finance federal construction programs.”