Construction spending falls to lowest level in 10 years
Construction spending fell 2.5 percent in December to a seasonally adjusted annual rate of $788 billion, the lowest level in 10 years, according to an analysis of new Census Bureau data by the Associated General Contractors of America.
All three major sectors of construction spending – residential, nonresidential and public – shared in the decline.
“These dismal results, coming just days after another government agency reported the overall economy grew for the sixth quarter in a row, show that the agony of the recession continues for millions of construction workers and their firms,” said Ken Simonson, the association’s chief economist, in a release. “Construction spending fell again in the last two months of 2010, and the preliminary total for the year was the lowest since 2000.”
Simonson said spending on power projects, including those related to solar and wind generation and transmission lines, rose for the fifth consecutive month in December and was up 13 percent from the last month of 2009. He expects those segments to perform well in 2011. Spending on transportation facilities, such as truck terminals, airports and transit projects, also rose slightly in December from the prior month and was up from year-ago levels.
“The outlook for 2011 is very mixed,” Simonson said. “Spending on rental housing, warehouses, hospitals and factories should pick up….But public school construction and other state and local projects will keep shrinking, while single-family homebuilding, retail and office construction are likely to remain feeble.”
Sixteen percent of respondents to a recent survey conducted by the association and Navigant Consulting Inc. said they thought the overall construction market would improve in 2011. Nearly half of the respondents – 48 percent – thought the turnaround would occur in 2012 and 36 percent of those polled said it would happen even later.