US commercial building seen strong in '07

14 May 2007 23:48  [Source: ICIS news]

By Al Greenwood

HOUSTON (ICIS news)--Non-residential US construction spending in 2007 could increase by 8-12% over 2006 levels, representing one of the strongest years so far this decade, an industry economist said on Monday.

"I'm very optimistic of the rest of 2007 and beyond," said Ken Simonson, chief economist for the Associated General Contractors of America, a trade group that keeps track of commercial construction data.

The rate of spending growth will not match the 13% increase that 2006 posted over 2005, Simonson said. That's because retail and office construction could slowdown as a result of the housing slump.

Commercial construction drives demand for several chemical products, including adhesives, polyvinyl-chloride pipe and certain types of coatings, industry sources said.

Due to nonresidential construction, Airgas' fourth-quarter sales exceeded the expectations of Bank of America, according to an analyst.

Simonson said other groups are also reporting increases in commercial construction.

Reed Construction Data said that nonresidential construction starts through April totalled $97.355 bn, some 22% higher than in 2006.

Overall, 15 of the 17 sectors tracked by the US Census Bureau reported increased spending in March over the same time last year.

March spending in the lodging industry rose by 64.4% from the same time last year, the largest increase, the bureau said. March office spending rose by 27%.

Upgrades and expansions caused spending to increase for plants, power plants, schools, highways and sewage plants, Simonson said.

Overall, nonresidential construction spending rose nearly 3% from February and nearly 17% from March 2006, the US Census Bureau said.

March residential spending dropped a tad over 14% from the same time last year.

By: Al Greenwood
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