Construction boom produces more big winners.

The Associated General Contractors of America's Chief Economist Ken Simonson is encouraged to see that construction continued expanding in March, as the value of construction put in place hit a seasonally adjusted annual rate of $1.05 trillion. He noted that it was the 14th straight monthly record, according to today's Census Bureau report.

"There were some big winners in the first quarter," Simonson said.

"Manufacturing construction soared 31% and communication leaped 26%, after years of falling activity. Lodging jumped 16%, thanks to higher occupancy and room rates at hotels and higher attendance at business meetings and conventions. The broad commercial category climbed 14%, led by a 19% rise in multi-retail construction such as 'big-box" stores and shopping centers. Warehouse construction, which had lagged for years, rose 11%, reflecting a recent rise in inventories ... Multi-family construction edged out single-family, 16 to 14%."

"For the first quarter of 2005 as a whole, construction exceeded the first-quarter 2004 total by nine percent. Furthermore, the gains were widespread. Private residential construction was up 13% over the year-ago quarter, private nonresidential was up seven percent and public construction was three percent higher," Simonson said. "I expect these results to continue for several more months, with both private and public nonresidential construction likely to strengthen further, offsetting a likely slackening of residential construction later in the year."

Simonson expects public construction to advance later this year "if Congress completes work on an overdue highway bill. I anticipate continued strength in private nonresidential construction as well. But residential construction will probably fade later in the year as interest rates gradually move up."

"My biggest concern is prices for construction materials, which are running eight percent ahead of last year's level, according to the Bureau of Labor Statistics. A report from the Institute for Supply Management shows price increases continued in April. Steel prices may flatten out, but other metals, cement, gypsum wall board, and petroleum-based products, as well as freight charges, are likely to cost a lot more than last year. Also, there are shortages cropping up for tires, insulation and possibly cement in some regions."