The 2006 U.S. transportation construction market was the most robust in more than 20 years with the value of work on highways, bridges, airports and transit systems up 15% over the last year, according to the American Road & Transportation Builders Association (ARTBA).
Fueled by increased federal, state and local highway investments, a $2.3 billion congressional appropriation for repair work on highways damaged by Hurricane Katrina and greater investments in freight rail, the total value of construction performed on transportation projects is expected to hit a record $106 billion in 2006, up from $92 billion in 2005, said ARTBA Vice President of Economics and Research Dr. William Buechner.
Highway and bridge construction provided much of the driving force for the 2006 growth. The value of construction work on highways and bridges grew almost $11 billion, or 16%, to $76.3 billion, the largest increase since 1984, when Congress was funding extra highway construction to help end a severe recession.
Some of the increased spending reflected higher construction costs, particularly for asphalt, cement and aggregates. But, even after accounting for higher costs, the real increase in highway and bridge construction was a robust 8% or more, Buechner, a Harvard-trained economist, said.
Unlike 2005 and 2006, when rising construction costs ate up part of the dollar increase in highway construction spending, the purchasing power of construction budgets in 2007 may get an unexpected boost from declining construction material costs. The 2005-06 inflation in highway construction costs appears to be slowing and may be ending. Falling petroleum prices are bringing down asphalt costs while the growth of worldwide cement capacity may help stabilize the cost of ready-mix concrete. The Producer Price Index for highway construction materials actually fell in August and September. If costs stay down, construction dollars in 2007 would buy more construction than in 2006, ARTBA said.
Buechner forecasts modest growth in the range of 1-2% for the U.S. highway and bridge construction market in 2007.