US sees spring bounce

02 June 2010

Construction spending in the US was up +2.7% or US$ 23 billion in April compared to March, the largest month-on-month increase since August 2000. The gains were driven by private residential construction, up +4.4%, while publicly funded activity was up +2,4% and the private non-residential sector gained +1,7%.

According to the Associated General Contractors of America (AGC), the country's stimulus spending plan was the main reason for the rise in public construction. The association pointed to a +7,9% rise from March to April in spending on drinking water infrastructure, while sewage infrastructure was up +3.9% and highway construction rose +3.6%.

AGC chief economist Ken Simonson said, "The stimulus is clearly driving one of the biggest increases in construction spending the industry has experienced in a long time. Once you look beyond the stimulus, however, these figures show how uneven and fragile the construction recovery remains."

According to forecasting company IHS Global Insight, the latest round of figures may indicate an industry recovery. Describing the results as "A solid construction report almost across the board," the company went on to say in a statement, "Construction spending peaked in March 2006. It may have hit a cyclical low in February 2010. However, it is too soon to make this call, because data revisions have a way of washing away recent gains. Nonetheless, the April 2010 report is reason to hope that the worst may be behind us."

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