"These figures show that construction, as well as other sectors, had stopped growing even before the tragedies of September 11," said Ken Simonson, Chief Economist for Associated General Contractors of America, the leading trade association for the construction industry. "Unfortunately, those events are likely to put a halt to many construction projects until owners can reassess their financial situation. I expect to see a further decline in construction across the board, followed by very limited categories of expansion in the next few months."
Simonson observed that August's decline was broad-based. The value of nonresidential private buildings put in place, $196.7 billion in August, shrank by 3 percent from July and 13 percent from its peak in March. Highway construction dropped nearly 10 percent from July to August, offsetting small gains in most other categories of public construction. Residential private construction slipped fractionally and is now 3 percent below its high-water mark in February.
Simonson noted that month-to-month changes in the data can be influenced by special factors such as unusual weather conditions and variations in reporting information to the Census Bureau. "But the long-term trend in private construction since early spring is unmistakably down. Now the public sector may have topped out as well," he said.
"I expect that public construction will hold up better than private in the near term, because projects like highways and schools do not require a positive cash flow," Simonson said. "However, declining tax receipts, particularly at the state and local level, are likely to cause many public projects that do not relate to security enhancements to be cancelled or deferred."
Note: the Census Bureau release is at www.census.gov/pub/const/c30_curr.pdf
The Associated General Contractors of America (AGC) is the largest and oldest national construction trade association in the United States. AGC represents more than 35,000 firms, including 7,500 of America's leading general contractors, and over 12,000 specialty-contracting firms. Over 14,000 service providers and suppliers are associated with AGC through a nationwide network of chapters. Visit the AGC web site at www.agc.org to find the chapter nearest you.