Nonresidential Sector Carries Market
In spite of struggling residential construction and credit markets, the nonresidential construction market continued to show no ill effect.
“Nonresidential construction shrugged off the turmoil in homebuilding and the credit markets in July to post another solid gain,” said Ken Simonson, chief economist for the Associated General Contractors of America (AGC). “Although total construction spending slipped 0.4 percent in July, seasonally adjusted, and residential fell 1.4 percent, nonresidential spending climbed 0.6 percent, the 10th consecutive monthly gain.”
According to Simonson, private nonresidential construction, “the type that might seem most vulnerable to a credit pullback, showed no sign of contagion.” It rose 0.4 percent in July and 17 percent year-to-date.
“The three most speculative components - commercial, office, and lodging - all advanced. Commercial construction was up 0.6 percent for the month and 15 percent year-to-date,” noted Simonson. “The two biggest commercial subcomponents - multi-retail (big box and other general merchandise stores, shopping centers, and malls) and warehouses - both leaped 4 percent in July and 28 percent year-to-date. Private office construction climbed 0.6 percent and 22 percent, and lodging shot up 0.8 percent and 60 percent.”
Publication date: 09/17/2007