Construction Spending Down in May
July 30, 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. “Stimulus has made a difference, but
Congress needs to provide long-term funding for transportation and water
projects to assure further economic growth,” Ken Simonson, chief economist for
the construction trade association, said.
“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,” Simonson commented. “Federal stimulus funds
helped keep public construction afloat and buoyed single-family
construction.”
There were year-over-year increases of 5.6 percent for highway and street
construction, 13.8 percent for other transportation, 5.1 percent for sewage and
waste disposal, 5.0 percent for water supply, and 23 percent for conservation
and development—all categories that have received stimulus funds, Simonson
pointed out. In contrast, spending on all other public and all private
nonresidential categories fell.
Simonson noted that 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,” he said. “Those distortions
have now ended, although Congress voted yesterday to extend the closing deadline
until September 30 for families that had signed contracts by April 30.”
Simonson concluded, “It’s even more important not to let funding lapse for
highway, transit and airport construction funding. Congress and the White House
need to make these programs a priority, along with long-term funding for
drinking water, wastewater and waterways.”
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