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Heavy Construction Spending Steady During Recession and Early Recovery

0 285 Market Intelligence

Heavy construction market drivers are balanced between positive and negative. This is consistent with spending trends which have been flat for over a year, except for a brief dip early in the recession. Little change is expected through 2011, says Reed Construction Data chief economist Jim Haughey.

Heavy construction market drivers are balanced between positive and negative. This is consistent with spending trends which have been flat for over a year, except for a brief dip early in the recession. Little change is expected through 2011. The positive impact of federal stimulus spending and environmentally mandated energy facility spending is approximately offsetting the negative impact of depressed state and local budget balances and much reduced private spending to add facility capacity.

The impact of the initial federal “shovel ready” construction stimulus program is now ebbing. Those funds will be replaced in 2010-11 by delayed spending on transit and power grid projects as well as a likely second stimulus plan finalized early next year.

Key Indicators of the U.S. Market Environment — Jan 2010
Heavy/Engineering Construction
(Driven by demographics and government finances, as well as cyclical factors)

  Year
Ago
Previous
Month
or Qtr.
Latest Level Recent
Trend
Impact
on Const.
Heavy/Engineering
Federal highway trust fund, $ billions
(U.S. Treasury Dept.)
10.604 8.001 Nov 8.501 Low rising
Electric power capacity utilization rate,
% level (FRB)
84 79 Oct 78 Low Falling
Airline revenue passenger miles,
billions (RCD) (ann. % change)
-4.4 2.6 Nov 2.5 Low Rising
State & local govt. capital spending,
$ billions (U.S. Commerce Dept.)
353 361 Q3 361 Average Steady
State and local government tax receipts,
$ billions (U.S. Commerce Dept.)
1351 1238 Q3 1264 Low Steady
Heavy contractor employment, 000s
(U.S. Labor Dept.)
933 829 Dec 811 Low Rising
Construction equipment shipments,
% change y/y (U.S. Census Bureau)
7.1 -44.1 Nov -43.0 Low Falling

Abbreviations: y/y = year over year; FRB = Federal Reserve Board; RCD = Reed Construction Data
Table: Reed Construction Data and Reed Construction Data - CanaData

by Jim Haughey

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