January’s sharp decline broke a nine-month string of monthly gains but still rose from last year’s levels, according to an analysis of new Census Bureau data by the Associated General Contractors of America.
Association officials cautioned that ‘across-the-board’ federal spending cuts known as sequestration, which took effect this week, along with a possible shutdown of the federal
government later this month, could hit construction harder than most sectors and dampen demand for needed projects.
“At first glance, January was a bad month for construction, with a sharp drop in private nonresidential spending, along with small dips in residential and public construction,” said Ken Simonson, the association's chief economist. “However, the January figure was higher than the year-ago level. Moreover, steep upward revisions today in the preliminary numbers for November and December suggest January may ultimately prove to have been positive, as well.”
Construction put in place totalled US$883bn (£569bn) in January, down 2.1% from the December total, which was marked up from an initial estimate of US$885bn to US$903bn on the basis of new data on power and energy construction. The January 2013 total was 7.1% higher than in January 2012. Private residential construction spending was flat for the month and up 22% year-on-year. Private non-residential spending slumped 5.1% for the month but climbed 4.0% over the year. Public construction spending dropped 1.0% for the month and 3.0% over 12 months.
Association officials said the cuts in federal spending known as sequestration that initially took effect this week, along with a possible shutdown of the federal government when the current, short-term spending authority expires on 27 March, would hit construction especially hard. A recently released association analysis indicated an estimated US$4bn of federal construction projects will be cancelled this year alone because of the sequestration. They urged lawmakers to adopt a budget that makes needed investments in infrastructure projects.
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