The economists at the Association of Builders and Contractors released data last week that shows that although private nonresidential construction spending was down in January, it was up 16.6 percent compared to January 2011. Public nonresidential spending remains pretty flat and was up only 0.4% from a year ago. The slow growth in public spending reflects the turmoil states and local governments are having in balancing their budgets as a result of lower property tax receipts from the recent real estate meltdown.
The fact that total nonresidential construction spending was down in January by 1% is actually viewed as disappointing. January was so warm countrywide, so the economists had anticipated a possible increase in construction spending. On the other hand, transportation, water/sewer and public safety segments of the construction economy experienced growth in January which is a hopeful sign that state and local government capital budgets are stabilizing. Many economists expect that the US economy will continue to expand moderately during the second quarter of 2012. This should result in modest gains in construction. If business spending continues to slow, then construction will remain flat. In other words, as almost every economic report actually reads, things will get better, unless they get worse.