Construction spending hit a record high for nonresidential and public building with a seasonally adjusted annual rate of 0.3 percent this June, according to a U.S. Census Bureau report released Aug. 1.
The report showed that June gains followed a drop of less than 0.1 percent in May, and a 0.2 percent gain in April. Ken Simonson, chief economist for The Associated General Contractors of America, said that while nonresidential building has accelerated, private residential construction has decreased significantly in the past three months.
Simonson expects falling residential spending and gains from strong private nonresidential and public spending to continue. “The ‘top line’ number will depend on which sector has the biggest change each month,” he said.
Simonson predicted that this trend could continue for the remainder of the year. “As builders work through current backlogs of sold but not-yet-built houses, they will curb new construction sharply,” he added. “Condo work may tail off even more steeply, but rental projects will take up some slack.”
On the private nonresidential side, Simonson said manufacturing, freight and passenger transportation, oil, gas, and alternative energy projects, lodging and hospital markets should keep contractors busy.
He also said that public construction may be helped by higher budgets that began in July for most states, although increased materials costs could limit the number of contracts awarded by state and local governments.