Nonresidential construction is expected to remain positive all year.

“Total construction spending rose a tad in March following a big upward revision for February, as single-family homebuilding finally held steady and nonresidential construction boomed again," said Ken Simonson, chief economist for The Associated General Contractors of America (AGC). Simonson was commenting on the April 30, 2007, construction spending report from the Census Bureau.

“Total construction spending rose 0.2 percent in March, seasonally adjusted, while the gain for February was revised from 0.3 percent to a huge 1.5 percent,” Simonson remarked. “New private single-family construction edged up 0.1 percent for the month, though it was down 27 percent from a year ago. The next largest category, the hard-to-measure residential improvements, more than reversed a big February gain but were still 19 percent ahead of the March 2006 total. New multifamily construction showed modest gains for both periods - up 0.2 percent for the month and 1.5 percent year-over-year.

“Private nonresidential surged another 2.4 percent for the month and 17 percent year-over-year,” Simonson continued. “All 11 of the Census Bureaus’ categories were up for the month and all but religious structures were up from March 2006.

Categories or subcategories that did even better compared to March 2006 included lodging, up 59 percent; offices, 31 percent; the multi-retail portion of commercial (general merchandise stores, shopping centers and malls), 23 percent; electric power, 22 percent; communication, 20 percent; and hospitals, 18 percent.

“Public construction was up 0.4 percent from February and 9 percent from March 2006,” Simonson observed. “The two big public categories - highways and streets, and education - were 11 percent and 9 percent higher than a year before, respectively. The next largest public category, transportation facilities, was up 8 percent despite a big drop this March.

“For 2007 as a whole, I expect the biggest private gainers to be power and energy-related projects, some of which Census includes in manufacturing; lodging; and hospitals,” Simonson concluded. “The office market may cool if sluggish overall economic growth causes big firms to slow hiring of office employees and the small-office market loses real estate agents, mortgage brokers and title companies, as I anticipate. That market, along with some retail construction, will be dragged down by a continuing steep decline in new single-family construction. Public construction should remain modestly positive but will be pressured by rising costs for construction materials and components.”

For more information, visit the AGC Web site at www.agc.org.