US non-residential construction gains on manufacturing

04 May 2009 16:55  [Source: ICIS news]

WASHINGTON (ICIS news)--US non-residential construction grew 2% in March from February to $703.8bn (€527.8bn) on a seasonally adjusted annual basis, the Commerce Department said on Monday, chiefly for work on manufacturing facilities.

The March pace of non-residential construction spending - including both government and private sector building - also was 1.7% ahead of the same month in 2008, the department said in its monthly report.

Non-residential building activity includes construction of hotels, office space, hospitals and clinics, schools, highways and roads, sewage and water treatment facilities, among others.

Even as the US housing sector began its decline in mid-2006, non-residential construction remained strong through that year and for much of the next before succumbing to the downturn in late 2007. 

Some economists believe that a recovery in the non-residential construction market may presage a return of growth for the crucial single-family home building industry.

Both residential and non-residential construction are key downstream consuming sectors for a wide variety of chemicals, resins and derivatives.

The gain in non-residential construction in March also is noteworthy for being due almost wholly to a 2.9% improvement in private-sector spending on manufacturing facilities compared with February.

The $83.9bn spent on new or improved manufacturing plants also marked a 64.4% gain compared with March 2008 when the figure was $51bn.

To some, this suggests that manufacturers are gearing up for what they believe will be a general economic recovery in the not too distant future.

There were other but more modest gains in private spending on construction for lodging (up 5.3% from February), commercial properties (up 1.5%) and communications facilities (up 1.7%).

Government spending on non-residential construction - schools, roads, sewage and water treatment plants, etc. - increased in March by 1.2% to $301bn and was 2.5% ahead of March 2008.

Spending by government at all levels - national, state and local - was expected to increase further as the $787bn federal stimulus package, approved in mid-February - begins to filter through the nation's economy.

($1 = €0.75)

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