Construction spending increased slightly in April, the second straight month of increases, thanks to increases in private nonresidential and home-improvement spending, the Associated General Contractors reported this week in an analysis of new Census Bureau data. However, the gains were tempered by sluggish home construction and declining levels of public investment in construction.
“Overall economic conditions seem better than they have been for several years, which normally leads to well-rounded construction growth,” said Ken Simonson, the association’s chief economist. “But these figures may be deceptively positive, masking weakening public sector demand and still-weak demand for residential construction.”
The April results were boosted by a modest half-percent rise in private nonresidential construction and a deceptively large 3.1-percent jump in private residential spending. Simonson, however, noted that the residential growth was attributable to a 7.6-percent jump in “improvements” a category the Census Bureau often revises downward in later months.
Simonson added that private nonresidential spending also was uneven. Power construction grew 3.2 percent, and there were increases of 4.7 percent for communication construction and 0.8 percent for private health care construction, offset by decreases of 1.3 percent in commercial construction, 1 percent in manufacturing construction and 3.2 percent in private office construction.
Also, construction employment was virtually unchanged in May as the industry added only 2,000 jobs for the month and the sector’s unemployment rate declined to 16.3 percent.
“At the current rate of growth, the construction industry will continue to experience double-digit unemployment rates for a long time,” added Simonson. “There just isn’t enough demand for construction to fuel the kind of hiring needed to get industry employment back to where it was in 2007.”