01 September 2010 20:14 [Source: ICIS news]
WASHINGTON (ICIS)--US overall construction spending fell to a 10-year low in July, according to government and industry data issued on Wednesday, as declines in highway, office building, schools and utility work paralleled the downturn in residential activity.
The Department of Commerce (DOC) said that construction spending in July was at a seasonally adjusted annual rate of $805.2bn (€636.1bn), down by 1% from June and nearly 11% below the level of activity in July 2009.
During the first seven months of this year, actual spending on all forms of construction amounted to $460bn, the department said, which was nearly 12% below the $522bn spent in the same period last year.
Construction work is a major downstream consuming sector for chemicals, generating at least $160 in demand for chemical and resin products for every $1,000 spent on building projects, according to the American Chemistry Council (ACC).
The department’s monthly report on overall construction includes data for all building work, including private sector and federal and local government spending on such projects as office space, warehouses, health care facilities, schools, power plants and transportation as well as housing.
Spending on government-only work such as streets, highways and sewage and water treatment facilities also is included in the totals.
The overall construction data provides a broader view of building activity than separate monthly reports on sales of existing homes and new single-family housing, both of which saw new and sharp declines in July.
The Association of General Contractors (AGC) said that while federal stimulus funds did help some areas of local authority spending such as public housing and conservation work, it has had little impact on highway and street construction, which was down by 3% in July from June and 7% below year-ago levels.
“As a result, overall construction spending is at its lowest level in a decade and hundreds of thousands of construction workers are unemployed,” said AGC chief economist Ken Simonson.
The association said that as federal stimulus funds flowed to some state roads and highway projects, local governments were making deep budget-deficit cuts in those areas, more than offsetting federal spending.
AGC chief executive Stephen Sandherr said the new spending data show that construction employment has declined in 82% of US metropolitan areas (276 out of 337) during the past 12 months.
“This makes clear that the construction industry is hurting,” Sandherr said.
The department’s data showed that construction spending in hotels and lodging declined by almost 54% from a year ago, was off by 33.6% for office buildings and fell 23.1% for commercial structures such as shopping malls and other retail facilities.
Construction spending on manufacturing facilities in July was down by 5% from June and was nearly 35% below year-ago levels.
($1 = €0.79)
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