Industry News

Economic Slump Chills Construction

Nov. 11, 2008

A recent report from the Washington, D.C.-based National Association for Business Economics (NABE) on third-quarter and expected activity in the construction industry shows distinct weakness. "Nonresidential construction is on the verge of a potentially long slide," says Ken Simonson, chief economist for the Arlington, VA-based Associated General Contractors of America (AGC).

A report on construction spending from the U.S. Census Bureau shows that nonresidential spending "eked out" a small gain (0.1 percent) in September, "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," says Simonson.

He also notes that contractors have seen developers putting projects on hold because of the credit freeze and weakening demand for stores, offices, and other facilities. "Meanwhile, states had to postpone construction bond issues or defer budgeted projects in order to meet balanced-budget mandates," says Simonson.

"The NABE survey, conducted in October among corporate economists, found that companies on balance plan to trim spending on structures in the next 12 months," says Simonson.

The Census report and the NABE survey can be viewed at www.census.gov/constructionspending and www.nabe.com.