The construction industry continues to suffer from significant declines in privately-funded construction investments, with new federal figures showing private construction investments declined by 20.6 percent between September 2008 and September 2009. The new Census Bureau figures show there's no sign of an economic recovery yet for the nation's construction industry, the Associated General Contractors of America noted.
"These figures show just how dire business conditions are for the nation's contractors and their six million plus employees," said Stephen E. Sandherr, the association's chief executive officer. "The only green shoots contractors are seeing are the weeds sprouting around their idle construction equipment."
The federal figures show the annualized rate of private construction spending declined from $774 billion a year in September 2008 to $614 billion a year in September 2009, Sandherr noted. On the nonresidential side alone, construction spending for lodging declined by 37.4 percent, 33.3 percent for offices, and 36 percent for commercial structures over the past 12 months. Manufacturing and power construction were the only parts of the private construction market to see increased investments, with 11 percent and 4.8 percent gains respectively, Sandherr added.
Publicly funded investments in construction did increase over the past year by 6.1 percent, from $308 billion to $326 billion, Sandherr noted. Public spending on commercial facilities and power structures grew the most, with 28.8 percent and 27.2 percent increases, respectively, over the past year. However, water supply and sewage investments actually declined by 1.9 and 1.8 percent respectively.
"Increased public investments in construction and infrastructure are welcome news, but this industry will continue to suffer while demand for private construction continues to plummet," Sandherr said. He called for a quick extension of the first-time home buyers tax credit and expansion of the carry back of net operating loss provision from two to five years for all businesses for 2008, '09 and '10 as a way to stimulate new private demand for construction.
He also urged Congress and the Administration to support the 30 measures outlined in the association's construction industry recovery plan, Build Now for the Future, which were designed to revive the private construction market while improving public investments in the nation's aging infrastructure.
View AGC's recovery plan, Build Now for the Future: A Blueprint for Economic Recovery.