“Nonresidential construction spending climbed to its 13th consecutive record in September, showing that the homebuilding slide hasn’t carried other segments downhill with it,” said Ken Simonson, Chief Economist for The Associated General Contractors of America. Simonson was commenting on the November 1 construction spending report from the United States Census Bureau.
The Census Bureau reported that seasonally adjusted construction spending slipped 0.3 percent in September, the third straight monthly drop, but nonresidential construction rose 1.1 percent, the 15th consecutive monthly rise.
“In the first nine months of 2006, overall construction spending was up 6.6 percent from the same period of 2005,” Simonson stated. Private, nonresidential construction is up 17 percent, year-to-date. Public construction is up 10 percent and residential construction is ahead of last years total by 1 percent.
Major private-sector growth categories on a year-to-date basis include lodging, up 48 percent compared to January-September 2005; multi-retail, up 37 percent; hospitals, up 25 percent; and manufacturing, up 23 percent. Multi-family construction is up 18 percent year-to-date.
“Nearly all of these categories should continue growing over the next year,” Simonson concluded. “I believe the economy is still fundamentally strong, and the housing slide will have limited impacts on other segments. A bigger concern is that fast-rising materials costs have forced cancellation or delay in many projects. Cost increases should moderate in the next few months, but materials costs will still outrun overall inflation.”