Construction up in the US
08 May 2008
The total value of construction put in place in the US grew to US$ 1067 billion in April, according to the latest report from the Census Bureau, up +8% on April 2004. This was the fifteenth consecutive monthly increase and another rise is expected to be reported for May. The country's leading construction-related associations are also reporting good first quarter growth and are predicting further gains this year.
“For the first quarter of 2005 as a whole, construction exceeded the same period of 2004 by +9%,”Associated General Contractors of America (AGC) chief economist Ken Simonson told iC. “Furthermore the gains were widespread with private residential growing +13%, private non-residential up +7% and public construction rising +3%.”
According to the AGC's figures, manufacturing construction and communication grew +31% and +26%, respectively, during the first quarter. Hotel construction increased +16% and warehouse construction by +11%, while broad commercial work grew +9%, thanks to a +19% increase in multi-retail and ‘big box’shop construction schemes.
Transportation also had a good start to the year with the American Road &Transport Builders Association (ARTBA) reporting +18% and +26% growth in the highways and airports sectors. The ARTBA's most recent report states that the value of construction on transportation projects in the first two months of 2005 grew by +14%, compared to the same period last year, to US$ 10.6 billion. “The US$ 5.4 billion of transportation construction work underway in February was an all time record, +17% higher than last year. February is traditionally one of the weaker months of the year for the sector,”said ARTBA vice president for economic and research William Buechner.
The Portland Cement Association (PCA) has just published its Spring Forecast. The PCA is not expecting a repeat of the rapid growth rates seen in the North America during 2004 to continue. But is predicting steadier but sustained +2% gains during the rest of this year. According to the forecast, the PCA is expecting US cement consumption in 2005 to grow by +3% this year to a record level of more than 123 million tonnes.
“The underpinnings of US economic growth are solid and will translate into +3.3 to +4% growth rates in GDP for 2005 and 2006,”said Ed Sullivan, chief economist for the PCA. “The general economic picture in the US is expected to result in sustained growth in overall construction, even in the context of rising interest rates, high oil prices, an oversized federal budget and trade deficit and continued upward pressure on commodity prices.”
Mr Simonson is also concerned about with the price of construction materials, which according to the US's Bureau of Labor Statistics are +8% higher than this time last year. “A report from the Institute of Supply Management shows that price increases continued in April,”explained Mr Simonson. “Steel and petroleum prices may have flattened out but are still higher than a year ago. Costs for other metals, cement, gypsum wall board, as well as freight charges, are likely to continue rising.”
He also added that shortages of tyres, insulation and possibly cement in some regions could become a problem in the coming months. “Recent reports suggest that the cement shortage could be even worse than last year when 35 states were affected.”
Nonetheless, Mr Simonson is predicting that the growth will continue for several more months with both private non-residential and public construction likely to strengthen further. He said, “Public sector growth will advance further if Congress completes its work on the overdue TEA-21 highway bill and enacts higher spending for drinking water and wastewater treatment facilities. This growth will offset a likely slackening in residential construction later in the year as interest rates gradually increase.”