US overall construction spending rises nearly 1% in May

02 July 2012 18:50  [Source: ICIS news]

WASHINGTON (ICIS)--US construction spending rose by nearly 1% in May from April, the Commerce Department said on Monday, with gains in private sector expenditures on residential and commercial properties offsetting declines in government outlays.

In its monthly report, the department said overall US construction spending rose by 0.9% in May to reach a seasonally adjusted annual pace of $830bn (€655.7bn) from the revised April figure of $822.5bn.

The May figure also represented a 7% advance from construction activity seen in the same month last year.

Private sector construction spending was the engine of growth for May, the department said, showing a 1.6% gain in May from April at $560.4bn.

That figure included a 3% improvement in residential construction – single-family homes, apartment buildings and condos – to $261.3bn.

Non-residential private construction work also rose in May, although with a more modest 0.4% advance.  May’s outlay for construction of hotels, hospitals, office buildings, communication and transportation, among others, reached $299.1bn.

However, public spending on construction by governments at all levels continued to decline in May, falling by 0.4% from April to $269.6bn.  It was the fifth straight month of declines in this category.

The sharpest decline in public work was in schools construction, down by 5% in May from April.  Highway construction also declined but by a more moderate 0.5%.

The Association of General Contractors of America (AGC) noted that the department’s May figures mark the highest pace of overall construction spending since December 2009 when the US was some six months into the current post-recession recovery.

AGC chief economist Ken Simonson said, “It is encouraging to see such a broad-based pickup in private construction”.

He noted that private non-residential spending rose for the third month in a row and was 19% higher in May than in the same month last year.

AGC also noted that four private construction categories each had 12-month spending gains of more than 25%, including a 35% increase in power and energy, a 29% advance in hotels, and 27% each in both education and manufacturing.

Simonson said based on the level of new projects already under way – and with help from a newly approved federal highway spending bill – he expects that overall US construction outlays this year will be positive for the first time since 2007.

The US recession began in December that year and officially ended in June 2009.

The general construction area is a key downstream consuming sector for US chemicals and resins, especially in residential building.

($1 = €0.79)

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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