The Census Bureau today reported that the value of construction put in place in August totaled $845.5 billion, a 1% decrease from July, and a nearly 3% drop from the year's high in April.
"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% from July and 13% from its peak in March. Highway construction dropped nearly 10% from July to August, offsetting small gains in most other categories of public construction. Residential private construction slipped fractionally and is now 3% below its high-water mark in February.
Simonson noted that month-to-month changes in the data could 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."
For further information, visit the Census Bureau at http://www.census.gov/pub/const/c30_curr.pdf.