Construction Spending Falls to Lowest Level in Seven Years,
Driven by Nonresidential Declines
Construction spending in January fell by $5.5 billion to $884 billion,
its lowest level since June 2003, according to an analysis of new federal
figures by the Associated General Contractors of America. Declining investments
in private-sector nonresidential construction and public construction
at all levels of government drove the 0.6-percent decline, according to
Ken Simonson, the association’s chief economist.
“What’s clear from this data is that the downturn in nonresidential construction
spending is far from over,” Simonson says.
“Federal funding for construction is one of the few crutches propping
up a deeply wounded construction industry.”
Simonson says that private, nonresidential construction spending declined
by 2.1 percent between December and January, and by 20 percent over the
past year. Power construction was the only private nonresidential construction
category to increase over the past year, by 16 percent, while most other
categories declined by double digits.
According to Simonson, direct federal construction spending increased
1.9 percent in January and 13 percent over the past 12 months to a record
$31 billion. “Federal funding has been giving contractors the lifeline
they need to stay in business,” he says.
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