After two months of declining figures, private, nonresidential construction increased 1.3 percent in September compared with the previous month, the U.S. Census Bureau said.
Associated Builders and Contractors called the strength of nonresidential
construction “remarkable” in the face of a slowing national economy.
Officials cited U.S. Census Bureau figures that said after
two months of declining figures, private nonresidential construction increased
1.3 percent in September compared with the previous month. Spending on such projects reached $415.2 billion. Overall nonresidential construction
was $715.6 billion, an 11.4 percent increase from September 2007, the bureau reported.
“The resilience of nonresidential construction spending in the face of
ongoing economic decline and a credit crunch is simply remarkable,” said the
ABC’s chief economist, Anirban Basu. “Many economists had expected September to
bring further decline after nonresidential construction declines in both July
and August. But, that did not happen as massive shifts in the global economy
continue to spur construction.
“For example, the spike in manufacturing-related construction spending is
related in part to the ongoing expansion of America’s export sector, which has
continued to be strong despite recent increases in the value of the dollar and
a slowing global economy,” he added. “Investment in power has predictably also
remained elevated, though it remains to be seen whether this will continue in
light of the recent collapse in oil and other commodity prices.
“Despite September’s bounce back, the outlook remains far from clear,” Basu
said. “Many of the projects currently under construction were planned and
financed earlier in the business cycle, prior to the credit crunch that
began in earnest in August 2007.
“However, there remains downward pressure on deal flow and we continue to
predict that the toughest times for the nonresidential construction industry
are in front of us,” he said. “Publicly financed projects are also becoming a
major issue given the disappointing tax collections at state and local levels.
Many states are reducing allocations for their respective capital improvement
programs, which will further suppress construction starts over the next few