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Private nonresidential construction spending continues to slide

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Private nonresidential construction spending in the United States fell 4.3 percent in January compared with December 2008, according to a report released this week by the U.S. Census Bureau.

“The ongoing U.S. recession has become increasingly apparent in the level of nonresidential construction activities,” said Anirban Basu, chief economist with Associated Builders and Contractors Inc. “January data shows the nonresidential construction marketplace is now deteriorating at an accelerating rate.”

Among the hardest-hit subsectors are conservation and development and religious construction, posting declines of 19.6 percent and 10.2 percent, respectively. Spending cuts in power and health care were also “quite deep,” Basu said in a release.

Education construction was the only subsector to post an increase, up 0.6 percent in January from December.

Half of the subsectors in nonresidential construction had spending increases on a year-over-year basis, with manufacturing posting the largest increase, up 48.5 percent, followed by public safety, up 21.2 percent, and water supply, up 15.2 percent. Subsectors with decreases in spending included communication, down 25.1 percent, and commercial, down 18.8 percent.

Overall, private nonresidential construction spending is up only 0.3 percent on a year-over-year basis.

“Even with the recently passed stimulus package, the near-term outlook for most nonresidential construction activities remains bleak, and as contractors continue to work through their accumulated backlogs, more participants in the marketplace are likely to experience cash flow issues,” Basu said.

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