Stimulus Helps Construction Spending Post Small Gain In June But Pain Continues For Other Contractors, Association Says

Total construction spending eked out a small rise in June as gains in stimulus-aided public categories offset decreases in homebuilding and private nonresidential spending, the Associated General Contractors of America said today in an analysis of new Census Bureau data. “Stimulus dollars are supporting construction jobs, but the pain is continuing for most contractors and their workers who depend on private projects or school construction,” said Ken Simonson, the association's chief economist.

Simonson noted that total construction spending inched up 0.1 percent in June at a seasonally adjusted annual rate, buoyed by a 1.5 percent increase in public construction, which offset declines of 0.8 percent in private residential and 0.5 percent in private nonresidential spending. “Every private category was negative, most deeply so, compared to June 2009,” Simonson observed. “But there were encouraging gains for the month in private hospital and power construction, both of which should be growth markets over the next several quarters.”

Among public categories, Simonson remarked that highway and wastewater construction each rose for the fourth consecutive month; other public transportation facilities—transit, rail and airports—jumped 20 percent from a year earlier; and public housing soared 31 percent compared to June 2009. “All of these categories have benefited from stimulus funds. In contrast, public primary and secondary school construction, which has been battered by falling property tax receipts and lower in-migration to formerly fast-growing school districts, shrank 27 percent in the past year.”

Stephen Sandherr, chief executive officer of the construction association, called on Congress and the White House to quickly enact legislation to provide long-term funding for public infrastructure spending and certainty for private construction. “It is deplorable that the airport trust fund is now on its 14th short-term extension, the highway and transit trust fund is in danger of shutting down on December 31, and there is no trust fund to sustain vitally needed water infrastructure upgrades,” Sandherr said. “Meanwhile, uncertainty over the future of major tax provisions and new financial rules are keeping investors on the sidelines, further depressing private construction.”