Construction Market Report

Total nationwide construction spending (seasonally adjusted) rose by 0.3% between October and November of 2002, according to a report by Daryl Delano, Reed Business Information’s Director of Economics. This marked the third straight month of increase following four months of decline.

Publicly funded construction was particularly strong during the month, rising 1.5%. But most categories of nonresidential privately funded work—for commercial and industrial buildings, as well as for telecommunications and utilities work—remained very weak.

The overall pace of construction spending for nonbuilding (heavy) construction projects increased by 1.1% from October to November, following a 1.9% decline the month before. The seasonally adjusted spending pace for the sub-sector of heavy construction—highways/bridge/tunnel work—rose 2.8% between October and November. But the November 2002 spending level was 1.2% lower than during November of 2001. Spending on water and sewer construction work fell by 1.1% during November, following a loss of similar size in October.

New residential building construction was up 5.7% during the first eleven months of 2002 when compared with the same period in 2001. Also during the same time frame, nonbuilding construction was up 0.7% from the year-earlier pace. However, the value of total (private and public) nonresidential building construction was 8.0% less through November of this past year than over the first eleven months of 2001.

Spending for office construction work declined again (-0.5%) between October and November. But both the retail (+0.6%) and hotel/motel (+2.2%) sectors of the commercial market managed to record gains for the second month in a row. Through the first eleven months of 2002, office building construction spending was running 27.9% behind the January-November 2001 total, and lodging construction spending was down by 28.8%. Retail building activity was down by 7.3% over the same period of comparison.

The industrial sector still gives no signs of an imminent rebound in construction activity. Total spending during November was down 1.4% from the October level, and the total value of manufacturing/warehouse construction work completed through the first eleven months of 2002 was worth 44.9% less than during January-November of 2001.

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