US construction spending hits 8-year low

Construction spending in the US fell to US$ 846 billion in the 12 months to the end of February, its lowest since 2002. According to the Associated General Contractors of America (AGC), activity in almost every part of the industry was down compared to the previous month as well as the year-ago position.

AGC chief economist Ken Simonson said, "Most of the economy seems to be improving but construction is falling into an even deeper hole. Bad weather may account for a small part of February's downturn, but most of the contraction reflects ongoing lack of demand, tight credit conditions and shrinking state and local budgets."

According to the AGC, the only bright spot was in the power construction sector on infrastructure such as power plants, wind & solar generation and transmission lines. This segment saw a +1.3% rise on January and a +9% improvement on a year ago. Mr Simonson said, "I expect this good news to continue, but I also anticipate further double-digit annual declines in other categories."

Employment 'blip'

Following the fall in activity in February, March saw the first rise in construction industry employment since June 2007. According to the Bureau of Labor Statistics, employment in the industry increased by 15000 jobs in March to 5.59 million, although employment fell by 59000 jobs in February.

An AGC statement said, "It will take another month or more of data to determine if this March figure is a turnaround or an anomaly."