Construction spending in September climbed to a nearly three-year high at an annualized rate of $852 billion, as increased spending on houses, apartments and private nonresidential projects outweighed a continuing downturn in public construction, according to an analysis of new federal data released Nov. 1 by the Associated General Contractors of America. Association officials said they expect both the public and private trends to continue despite the disruption caused by Hurricane Sandy.
“It is heartening to see the growth in total spending, but the progress remains fragile and fragmentary,” said Ken Simonson, the association’s chief economist, noting that construction spending had dipped the previous month and that spending in several categories remains lower than in September 2011. “In the wake of the massive losses from [Hurricane Sandy], many construction priorities will be reordered, but overall private and public spending patterns are likely to stick unless federal and state lawmakers devote more funds to construction.”
Simonson noted that total construction spending rose 0.6% for the month and 7.8% from September 2011 to September 2012, bringing the total to the highest level since October 2009. Private residential spending accelerated, increasing by 2.8% compared with August and 21% during the past 12 months. Private nonresidential construction, however, inched down 0.1% for the month, but remains up 8.8% for the year. Public construction shrank 0.8% in September and 4.2% year-over-year.
Public construction fell for the third straight month, with declines in the two dominant categories. Highway and street construction spending decreased 1.6% in September and 2.4% year-over-year.
Stephen Sandherr, chief executive officer for the construction trade association, called on public officials to make available extra funds for rebuilding.
“Lawmakers cannot merely raid one part of their construction budgets to make urgent repairs at a time when funding for infrastructure is already inadequate,” he said. “Stabilization and restoration of the hard-hit infrastructure in the Northeast should supplement, not crowd out, long-needed projects elsewhere and in that region and nationwide.”