ConDig (01-Jun-17). US construction spending continued to crumble in April, with latest figures from the US Commerce Department showing a 1.4% drop as investment in both private and public projects dried up.
Spending in April was reported at a seasonally adjusted annual rate of $1.219 trillion, below the upward-revised total of $1.236 trillion in March.
It comes as private nonresidential construction spending edged down 0.6% to a rate of $426.6 billion, while public construction crashed 3.7% in April to $275.2 billion.
The largest private nonresidential segment in April was power construction (including oil and gas pipelines), which fell 2.2% from the month prior and is down 2.6% for the year-to-date.
The biggest public segment— highway and street construction—fell 3.7% for the month but is up slightly at 0.3% for the year. The other major public category—educational construction—dipped 2% in April and is down 0.2% for the year.
Private residential construction declined 0.7% to $516.7 billion. Within the residential segment, single-family edged up 0.8%, while multifamily fell slightly to 0.2%.
“Most private construction categories have increased significantly in the first four months of this year compared to the same period in 2016, despite a pullback from March to April,” said Ken Simonson, chief economist at the Associated General Contractors of America.
“But spending on public infrastructure for transportation, water and sewer projects has been slumping.”
Industry analysts have said that the drop in public construction spending highlights the need for a new infrastructure plan for the country, similar to the one currently being considered by President Donald Trump.
Trump’s infrastructure plan, which could total around $1 trillion, is understood to be largely complete and details are expected to be revealed in the next few weeks.
Under the plan, $200 billion in taxpayer money will be used to kick starts the plan’s remaining private investment and leverage $1 trillion in infrastructure investment over 10 years.
Associated General Contractors of America officials have urged Congress and the Trump administration to identify new, long-term and sustainable ways to pay to improve and expand aging public infrastructure, adding that a budget proposal released last week by the administration should start a debate about the best way to fund and finance new public works projects.
“It will be increasingly difficult for the economy to expand if employers are having to spend more to cope with aging infrastructure instead of on new jobs, new equipment and new innovations,” said Stephen E. Sandherr, the association’s chief executive officer.