Construction spending fell in February by $11.6 billion, or 1.3%, to $846 billion, a low last recorded in 2002, according to an analysis of new federal figures by the Associated General Contractors of America (AGC), Arlington, Va. Declines occurred relative to both the month before and February 2009 in most categories of private residential and non-residential construction, as well as public construction, according to Ken Simonson, chief economist for AGC. "Most of the economy seems to be improving, but construction is falling into an even deeper hole," says Simonson. "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."
New single-family construction spending remained essentially flat in February, dipping by 0.1% after eight consecutive monthly increases, and was 3.9% above the February 2009 total. Improvements to existing single- and multi-family construction were down 4.3% for the month but 4.3% higher than a year earlier. "These numbers suggest that single-family construction will rebound in 2010, even as multi-family continues to sink,” says Simonson. "New multi-family construction spending was level in February but 52% below the year-ago number. "
"Among private non-residential categories, the only bright light is power construction — power plants, renewables such as wind and solar, and transmission lines — where spending rose 1.3% in February and 9% compared to a year before,” says Simonson. "I expect this good news to continue, but I also anticipate further double-digit annual declines in other categories."
Spending on lodging was down 6.7% for the month and 53% year-over-year; commercial, including retail, warehouse, and farm fell 3.5% for the month and 38% for year-over-year; private offices declined 2.0% in February and 38% yar-over-year; and manufacturing was up 3.4% for the month but down 35% year-over-year.
"Health care spending could go either way; it will take a while for providers and investors to digest the implications of the new law," says Simonson, noting that total health care spending shrank 1.6% in February and 15% from a year before.