U.S. Construction Spending Statistics for September
According to Reed Construction data, “Total construction spending rose 0.5% in September but the initially reported 0.4% increase for August was revised to a 0.2% decline. Both changes came from the badly measured residential remodeling sector. The big jump in remodeling initially reported in August was revised away then reappeared in September. The trend in total construction spending is flat to slightly down for the last few months and this trend will continue for several more months.
The forecast for construction spending has been tweaked slightly to push some activity previously expected in late 2010 ahead to 2011. Much of the revision was for single family homes. While starts have recovered as expected from the pull ahead caused by the homeowner tax credit, the number of homes under construction has continued to ebb lower. Also, the value of September construction starts was the lowest in more than a year. Random dips occur occasionally in the absence of negative trends in underlying market drivers. However, the 2011 construction spending forecast will be marked down if the value of October starts, to be released by Reed Construction Data next week, remain near the depressed September level.
The Reed Construction Data spending forecast projects a 10.6% drop in 2010 and then a 4.9% recovery in 2011 and a stronger 12.9% gain in 2012. Construction will expand faster than the rest of the economy once the recovery is underway in all sectors of the economy.
Heavy construction spending increased 0.1% in September. Spending has been at the end of 2009 level for the last three months after dipping earlier in 2010. There were two significant changes in September. Transportation spending increased 4.1% from the recent surge of stimulus fund financed projects. Recent power spending estimates were revised down sharply. Be cautious with this change. Power spending estimates are often revised significantly. However, further declines in power construction are expected with the current low utilization rate of electric generating facilities and the likely drying up of federal subsidies for alternative power generation.
Heavy construction spending is forecast to drop 2.7% this year and then increase 1.8% in 2011 and 3.8% in 2012. These gains are less then expected project cost increases. 2009-12 will a four year stagnant market.”