U.S. construction spending falls on slump in commercial projects

Nonresidential construction dropped 6.9% in January, partly due to winter storms, tight credit and high vacancy rates.

03/04/2011


Construction projectConstruction spending in the U.S. fell more than forecasted in January, paced by the biggest slump in commercial projects in 17 years, showing that the industry will continue to be a laggard in the economic recovery.

The 0.7% drop brought the value of all projects down to a $791.8 billion annual rate, the lowest since August, according to the U.S. Dept. of Commerce. Outlays on private non-residential works dropped 6.9%, the most since January 1994, which may reflect the influence of winter storms. This January was the fifth snowiest January in 45 years of satellite coverage, according to the National Climatic Data Center.

Construction of power plants, hospitals, hotels, and office buildings dropped during the month as tight credit and high vacancy rates restrained investment.

“Office vacancies are high and consumer spending is weak, making the need to expand into shopping centers fairly limited,” Neill Dutta, an economist at Bank of America Merrill Lynch Global Research in New York, said before the report.

Private construction spending fell 1.2% in January from the prior month. Spending on public construction fell 0.1%, the report said. Federal construction spending increased 9.1%.

Government agencies are under pressure to cut spending. States are projecting $125 billion of budget deficits in fiscal 2012 and will lose most federal stimulus funds this year, the Washington-based Center on Budget and Policy Priorities said in a Jan. 21 report.

The Dept. of Commerce also revised the December reading up to a 1.6% drop from a previously estimated decline of 2.5%.

- Edited by Bettina Chang, Consulting-Specifying Engineer, www.csemag.com



Product of the Year
Consulting-Specifying Engineer's Product of the Year (POY) contest is the premier award for new products in the HVAC, fire, electrical, and...
40 Under Forty: Get Recognized
Consulting-Specifying Engineer magazine is dedicated to encouraging and recognizing the most talented young individuals...
MEP Giants Program
The MEP Giants program lists the top mechanical, electrical, plumbing, and fire protection engineering firms in the United States.
May 2018
40 Under 40 winners, fire and life safety, performance-based designs, and more
April 2018
VRFs, lighting controls, BIM coordination, and more
March 2018
Sizing water pipes, ASHRAE 90.1, recovering waste heat, and more
Data Centers: Impacts of Climate and Cooling Technology
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
Safety First: Arc Flash 101
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
Critical Power: Hospital Electrical Systems
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me