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Jan. 9, 2006: Construction Spending In November Sets Record

January 9, 2006
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WASHINGTON - "Construction spending in November outpaced even the upwardly revised October and September totals," stated Ken Simonson, chief economist for the Associated General Contractors of America (AGC). He was commenting on new Census Bureau figures that showed the value of construction put in place set a record of $1.15 trillion at a seasonally adjusted annual rate, up 0.2 percent from October. The totals for October and September were revised upward by 1 percent apiece from last month's estimates.

"Growth has been steady and well distributed among the major construction segments for the past several months," Simonson observed. "For the first 11 months of 2005, total construction was 9 percent higher than in the same months of 2004. Private residential construction grew 11 percent, public construction, 8 percent, and private nonresidential, 5 percent.

"The leading categories have been multi-retail (general merchandise, shopping centers, and shopping malls), up 25 percent year-to-date; manufacturing construction, 23 percent; private multifamily, 21 percent; hospitals, 13 percent; private single-family, 12 percent; and highways and streets, 11 percent," Simonson noted.

"Fast-rising materials and fuel costs have exaggerated the growth in some of these categories, especially highway construction," Simonson added.

Simonson predicted, "For 2006, I expect the cost of fuel, asphalt, and plastics such as polyvinyl chloride (PVC) pipe, to average 10-20 percent higher than in 2005, because of high petroleum and natural gas costs. Copper remains expensive, and I expect continuing spot shortages of cement that will push concrete prices higher nationwide. However, steel, wood, and gypsum products should be no higher on average than in 2005 despite a lot of month-to-month volatility.

"The leading construction segments are likely to be manufacturing, health care, and lodging," Simonson said. "Single-family construction will fade as the year goes on."

The Associated General Contractors of America represents more than 32,000 firms, including 7,000 leading general contractors, and over 11,000 specialty-contracting firms. For more information, visit www.agc.org.

Publication date: 01/09/2006

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