Business
& Labor
Industry Metrics Show Soft Spots and Bright Hopes
(archrecord.construction.com - 11/14/2006)
By Tony
Illia
Despite softening home sales, nonresidential
construction spending still remains red hot. Although the
U.S. Census Bureau reported home construction dropped 1.1
percent in September, nonresidential work rose, also 1.1 percent,
for the fifteenth consecutive month of gains.
"In the first nine months of 2006
combined, overall construction spending was up 6.6 percent
from the same period of 2005," says Ken Simonson, chief
economist with the Associated General Contractors of America.
Hotels and resort-related construction
spending saw a 48 percent gain over the first nine months
of last year; retail stores, shopping centers and malls were
up 37 percent; hospital spending grew 25 percent; and manufacturing
increased by 23 percent. Multifamily construction, meanwhile,
was up 18 percent year-to-date, as a surge in rental facilities
is offsetting a dip in condominium building.
Highway and street construction, meanwhile,
rose 16 percent year-to-date over 2005, while educational
construction increased by 7 percent. Other positive growth
areas include sewage and waste disposal and transportation
facilities. Nearly all of these categories are expected to
grow in 2007, due to a fundamentally strong economy.
“The housing slide will have limited
impacts on other segments,” says Simonson. “A bigger
concern is that fast-rising materials costs have forced cancellation
or delay in many projects. Cost increases should moderate
in the next few months, but materials costs will still outrun
overall inflation."
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