US construction spending declined in February this year by $11.6 billion, or 1.3 percent month on month, to $846 billion, a low last recorded in 2002, according to a report released by the Associated General Contractors of America. Declines occurred relative to both the month before and February 2009 in most categories of private residential and nonresidential
construction, as well as public
construction, the association's chief economist Ken Simonson noted.
"Most of the economy seems to be improving but
construction is falling into an even deeper hole," Simonson commented. "Bad weather may account for a small part of February's downturn, but most of the contraction reflects ongoing lack of demand, tight credit conditions and shrinking state and local budgets."
Simonson pointed out that the February decrease might prove to be even worse once the government publishes revised data. "It appears many projects are being halted or scaled back," Simonson said.
"Among private nonresidential categories, the only bright light is power
construction-power plants, renewables such as wind and solar, and transmission lines - where spending rose 1.3 percent over the previous month in February and nine percent compared to a year before," Simonson stated. "I expect this good news to continue, but I also anticipate further double-digit annual declines in other categories."
"Health care spending could go either way; it will take a while for providers and investors to digest the implications of the new law," Simonson concluded, noting that total health care spending in February shrank 1.6 percent month on month and 15 percent from a year before.