Best and worst of times for construction spending.
"It was the best of times for homebuilders and public construction; it was the worst of times for private nonresidential construction," said Kenneth D. Simonson, chief economist for the Associated General Contractors of America (AGC), the nation's leading construction trade association.
Census Bureau data showed that construction put in place showed that the total amount spent on nationwide construction projects in October rose 0.9% from September's upwardly revised total to a record $922 billion at a seasonally adjusted annual rate.
"Private residential construction jumped nearly 13% from October 2002 and public construction was up a robust 6.6%. Both categories set records," Simonson observed. "Meanwhile, private nonresidential construction slumped 3.6% from a year ago. The seasonally adjusted annual rate of $213 billion was the lowest since June 1997.
"Single-family homebuilding soared a phenomenal 18% and multi-family construction gained a strong 7%," he said. "The third component of residential construction, which Census doesn't show separately but does include in the totals, is improvements. That category was up 2.5% from a year ago.
"Among the largest public categories, highway and street construction soared 9.5%, pushing it ahead of educational construction, which dipped 0.2%," he said.
"The private nonresidential figure was a disappointment, given all the recent positive economic news," Simonson said. "For instance, the Institute for Supply Management reported this morning that economic activity in the manufacturing sector grew in November for the fifth month in a row, with a huge jump in the new-orders component. But the value of manufacturing construction put in place fell another 6% in October from the already depressed level of October 2002.
"The broad commercial (retail and wholesale) segment was off 3% from a year ago, as automotive facilities dropped 27%, food and beverage retail construction shrank 16%, and the troubled shopping-mall subsector fell 13%," he said.
He concluded, "The broad economy recovery will eventually help the lagging parts of private nonresidential construction. Retail construction will probably pick up first, followed by lodging.
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|Publication:||Real Estate Weekly|
|Article Type:||Industry Overview|
|Date:||Dec 10, 2003|
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