Nonresidential construction spending up significantly

Despite steep increases in some construction material prices, economists are predicting a continued surge in nonresidential building.

While the U.S. Census Bureau’s latest construction spending report shows overall spending in April was down 0.1 percent from March, private nonresidential construction is up 10.8 percent in the first four months of this year compared to the same period last year. And there aren’t any signs yet of new residential construction slowing down, either.

“Among the major private nonresidential construction categories, manufacturing and multi-retail stand out, with year-to-date increases of 22 and 37 percent,” said Ken Simonson, chief executive of the Associated General Contractors of America. Also leading the category were hospital construction with 25-percent growth, lodging at 18 percent and office construction with 14 percent.

Simonson said the year-to-date totals, which compare the first four months of 2006 with the same period in 2005, show the apparent decline in residential construction is limited to improvements, which dropped 10 percent. That doesn’t mean, however, that there’s a slowdown in new single-family or multi-family home building, which are up 13 percent and 19 percent, respectively.

Total construction spending in April was 8.5 percent higher than in April 2005. When the first four months of this year are compared to January through April of last year, public construction and private residential spending also gained 9.7 percent and 7.8 percent, respectively.

Simonson predicts the economy will keep boosting nonresidential construction, even though the cost of materials is increasing and causing some delays for building projects.