"Nonresidential construction is on the verge of a potentially long slide," Ken Simonson, chief economist for The Associated General Contractors of America (AGC), warns. Simonson's comments followed reports from the Census Bureau on construction spending in September and the National Association for Business Economics (NABE) on third-quarter and expected activity.
"The census figures show nonresidential spending eked out a gain in September of 0.1 percent," Simonson notes. "But private nonresidential spending was down nearly 1 percent from its high-water mark in June, while public spending tumbled 1.3 percent in September alone.
"Contractors have been reporting that developers put lots of projects on hold because of the credit freeze and weakening demand for stores, offices and other facilities," Simonson observes. "Meanwhile, states had to postpone construction bond issues or defer budgeted projects in order to meet balanced-budget mandates.
"The NABE survey, conducted October 10-23 among corporate economists, found that companies on balance plan to trim spending on structures in the next 12 months," Simonson states. "That's a reversal from the July survey.
"Construction has a lot riding on the election results--at local, state and national levels," Simonson concludes. "There are many school and other bond issues up for a vote. And the next President and Congress will need to work promptly to enact long-term highway, transit, airport and water funding bills. Meanwhile, we urge immediate action on infrastructure spending as part of any stimulus bill this year or next."