Construction Spending Soars to Record in September

Construction put in place rose to a record level in September, and all construction-related sectors had strong showings, according to Kenneth D. Simonson, chief economist for the Associated General Contractors of America (AGC).

The U.S. Census Bureau’s data on the value of construction put in place in September showed that the total amount spent on construction projects rose for the fourth month in a row, to a third straight record of $910 billion at a seasonally adjusted annual rate. That was 1.3% above the upwardly revised August total of $899 billion (initially estimated at $883 billion). The total for July also was revised upward, to $893 billion (from $881 billion). Seasonally adjusted spending in September was 6.5% higher than a year before; for the first nine months of 2003, spending totaled 3.1% more than in January-September 2002.

“Private nonresidential construction climbed 2.5% from August to September on a seasonally adjusted basis, reaching its highest level since April,” Simonson says. “A particularly encouraging element of this segment was manufacturing construction, which hit a 13-month high.

“The healthiest major nonresidential construction category remains health-care construction, which was up 3.7% for the month and 10% year-to-date,” Simonson notes.

Public construction set a record for the fourth straight month and rose for the sixth time in a row. “Although the September total was almost indistinguishable from August’s upwardly revised figure, it is heartening that budget cuts haven’t slowed public construction yet,” Simonson says. The year-to-date total is 2.5% ahead of the total for the first nine months of 2002.

Private residential spending also was up. It achieved a third consecutive record in September, rising 1.4% from August. Multi-family construction is up 3% through the first nine months of 2003 compared with the same period of 2002, while single-family construction has posted a 13% gain.

Simonson concludes, “Although I expect construction to slow in the fourth quarter, the great third-quarter figures give me hope that both public and private nonresidential construction will do better in 2004 than I had been predicting.”

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