Construction Spending Plummets to Lowest Level in Seven Years

• Sophia Venetos
• March 3, 2010

A new year is supposed to mark a time of change, and generally positive change at that. But the construction industry isn’t feeling it. Construction spending fell by $5.5 billion to $884 billion in January, its lowest level since June 2003, according to an analysis of new federal figures by the Associated General Contractors of America (AGC). Declining investments in private-sector non-residential construction and public construction at all levels of government drove the 0.6 percent decline, the Associated General Contractors of America's chief economist Ken Simonson noted.

"What's clear from this data is that the downturn in nonresidential construction spending is far from over," Simonson said. "Federal funding for construction is one of the few crutches propping up a deeply wounded construction industry."

Private nonresidential construction spending declined by 2.1 percent between December and January and by 20 percent over the past year, Simonson said. However there was one private nonresidential construction category that increased in 2009. Power construction managed to jump by 16 percent, while most other categories declined by double digits, Simonson said.

Simonson also noted that two major categories of federally-driven transportation spending, public highway & street construction and other transportation construction, increased by 6 and 18 percent, respectively.

Many construction jobs still remain at risk because the federal transportation program recently expired. Without federal funds, total spending on highway and transportation projects is sure to plummet this year, Simonson added. AGC officials have advised Congress to act quickly to renew the federal transportation program.