The Associated General Contractors of America’s chief economist Ken Simonson last week said construction spending set a record for the 15th straight month in April, led by factories, communications, stores, multi-family housing, warehouses and hotels.
Simonson was commenting on the Census Bureau’s report from last week that the value of construction put in place rose in April to $1.067 trillion at a seasonally adjusted annual rate, up 0.5 percent from the upwardly revised March total and up eight percent from the level of April 2004.
“More noteworthy than the single-month gain was the strong performance of so many project types through the first four months of 2005 compared to the same period of 2004,” Simonson said. “Overall, construction increased a hefty nine percent year-to-date, with several categories far exceeding that rate.
“I expect both residential and private nonresidential construction to keep performing well for the rest of 2005,” Simonson said. “With the 10-year Treasury note still hovering near four percent, I’m not worried that mortgages will become unaffordable anytime soon. And the large number of fast-growing categories gives me hope that nonresidential will end the year well above last year’s totals.
“My major concerns are about availability and cost of certain materials, especially cement,” Simonson said. “Reports reaching AGC in the last few days indicate that cement shortages will be even more severe than last year, when they eventually touched 35 states. Already, deliveries are being curtailed in Texas, Oklahoma, the Northwest and Florida. AGC hopes the Commerce Department will step up efforts to allow more imports of Mexican cement, instead of our having to bring cement half way around the world through clogged ports and rail lines.
“Costs remain a problem,” Simonson added. “Concrete and gypsum products have risen at double-digit rates in the past year. Steel and petroleum prices have begun to ease but remain far above year-ago levels.”
