Construction spending increased in February

Private-sector gains offset small decline in public sector

Editorial/Commentary News AGC April 05, 2012
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Construction spending in February topped year-ago totals by 5.8% as a double-digit increase in private construction offset a small drop in public sector spending, according to a new analysis of federal data released by the Associated General Contractors of America (AGC). The gains occurred despite a 1.1% decrease in spending from January to February and a dip of 0.8% the month before, based on revised data.

 

"It is heartening to see that nearly all private residential and nonresidential segments exceeded their February 2011 levels this February and that the decline in public construction has moderated from the steep pace of early last year,” said Ken Simonson, the association’s chief economist. “The improvement is too widespread to be attributable just to favorable weather comparisons.”

 

Simonson commented that private nonresidential spending had an especially strong year-over-year gain, rising 14% from February 2011 to February 2012, although spending sank 1.6% from January to February. He noted that the biggest increases were in the two largest private nonresidential categories: power construction, which includes shale-related activity as well as traditional and renewable electric power (-2.1% for the month, +24% over 12 months); and manufacturing (+1.7% for the month, +40% over 12 months).

 

Simonson noted that public construction spending declined 1.4% in February from a year earlier and 1.7% from January. The two largest public categories showed similar results. Highway and street construction, the largest public category, edged up 0.4% year-over-year but fell 2.6% for the month. Educational spending rose 0.8% over 12 months but dropped 2.5% from January to February.

 

AGC officials warned that public construction spending may soon decline more sharply, unless lawmakers provide adequate funding for transportation and other infrastructure needs. They said the fact that Congress has failed to enact a host of long-term infrastructure and tax measures was making it hard for many firms to make business investments and hiring decisions.

 

“Once again, Congress has left contractors and states without the certainty they need to make long-run highway construction plans,” said AGC’s chief executive officer, Stephen E. Sandherr. “The latest 90-day extension of highway funding means vitally needed long-term capacity additions and reconstruction projects remain in limbo.”

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