The 2020 Mid-Year Economic Update_long

Construction Spending Up Slightly in October, But Still Slow

Economist: With continued weakness in key sectors, it's 'hard to feel optimistic about near future.'
building-construction

Construction spending during October 2010 was estimated at a seasonally adjusted annual rate of $802.3 billion, 0.7 percent above the revised September estimate of $797.1 billion. The October figure is 9.3 percent below the October 2009 estimate of $884.7 billion, according to the U.S. Census Bureau of the Department of Commerce.

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During the first 10 months of this year, construction spending amounted to $684.7 billion, 11.2 percent below the $770.6 billion for the same period in 2009.

According to the Associated General Contractors of America chief economist Ken Simonson, data indicates continued weakness in many construction categories, including private nonresidential and single-family construction.

“Without any upward trend in key private-sector construction components like homes and office buildings, it is hard to feel optimistic about the near future,” said Simonson, who is a panelist in MDM's upcoming 2011 Economic Forecast webcast. “With public construction at risk of cutbacks, it is premature to conclude that construction has awakened from its long nightmare.”

He said that power construction increased by 8.8 percent between September and October at a seasonally adjusted rate, but is still below the year-ago level. Public spending was aided by stimulus funding, military base realignment and Gulf Coast hurricane-control projects.

Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $481.8 billion, 0.8 percent above the revised September estimate of $477.8 billion. Residential construction was at a seasonally adjusted annual rate of $229.6 billion in October, 2.5 percent above the revised September estimate of $224 billion. Nonresidential construction was at a seasonally adjusted annual rate of $252.2 billion in October, 0.7 percent below the revised September estimate of $253.8 billion.

Public Construction
In October, the estimated seasonally adjusted annual rate of public construction spending was $320.5 billion, 0.4 percent above the revised September estimate of $319.2 billion. Educational construction was at a seasonally adjusted annual rate of $75.0 billion, 1.7 percent below the revised September estimate of $76.3 billion. Highway construction was at a seasonally adjusted annual rate of $87 billion, 1.2 percent above the revised September estimate of $86 billion.

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