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Heavy Engineering Construction Spending Tumbles for the Third Month in a Row

0 4650 Market Intelligence

Heavy engineering (non-building) construction spending sank 1.4% on a seasonally adjusted (SA) basis in August after declining 0.7% in July. Nonetheless, on a year-to-date not seasonally adjusted (NSA) basis, heavy engineering spending advanced 9.5% over the same period in 2011.

Heavy engineering (non-building) construction spending sank 1.4% on a seasonally adjusted (SA) basis in August after declining 0.7% in July. Nonetheless, on a year-to-date not seasonally adjusted (NSA) basis, heavy engineering spending advanced 9.5% over the same period in 2011.

Water and sewer construction spending was the only major heavy engineering spending category to rise in August, jumping 1.5% after rising 0.4% in July. However, reflecting earlier declines, on a year-to-date basis, it was down 2.9% from last year.

Transportation ended four consecutive months of increases, falling 1.0% in August. On a year-to-date basis, the measure was up 2.4% from a year earlier. Two other heavy engineering categories were up on a year-to-date basis — power (+31.1%) and highway (+4.5%).

U.S. Heavy Engineering (Non-Building) Construction
(billions of U.S. current dollars)

  Monthly Figures (1)
(latest actual values)
3-Month Moving Average Year-to-Date (NSA)
  Jun-12 Jul-12 Aug-12 Jun-12 Jul-12 Aug-12 Jan-11 to
Aug-11
Jan-12 to
Aug-12
Transportation 37.6 37.8 37.4 36.6 37.6 37.6 22.7 23.3
  Month-over-Month
  % Change
0.9% 0.4% -1.0% 4.6% 2.5% 0.1%    
  Year-over-year
  % Change (NSA)
7.4% 11.6% 4.9%       -8.8% 2.4%
Communication 17.4 17.3 16.7 17.1 17.2 17.1 11.3 11.0
  3.0% -0.7% -3.4% 0.8% 0.8% -0.4%    
  -6.1% 0.3% -4.7%       -0.2% -2.5%
Power 88.8 87.7 85.1 91.7 89.5 87.2 45.3 59.4
  -3.5% -1.2% -3.0% -1.9% -2.3% -2.6%    
  17.3% 18.6% 12.6%       -3.0% 31.1%
Highway 82.3 81.5 81.0 80.7 81.4 81.6 48.5 50.7
  2.4% -1.0% -0.7% 1.9% 0.8% 0.2%    
  6.1% 8.5% 2.4%       -5.3% 4.5%
Water and Sewer 34.2 34.4 34.9 35.3 34.8 34.5 23.9 23.2
  -4.0% 0.4% 1.5% -2.0% -1.4% -0.8%    
  -7.3% -6.4% -5.2%       -11.3% -2.9%
Conservation & Development 6.1 5.9 5.8 6.2 6.1 5.9 4.9 3.9
  -5.5% -3.0% -2.5% -1.3% -1.0% -3.7%    
  -22.9% -16.6% -26.7%       10.1% -20.9%
Total (2) 266.5 264.6 260.8 267.6 266.6 264.0 156.7 171.5
  -0.8% -0.7% -1.4% 0.3% -0.4% -1.0%    
  5.8% 8.4% 3.1%       -5.4% 9.5%

(1) Monthly figures are seasonally adjusted at annual rates (SAAR figures).
(2) Total may not equal the sum of its components due to rounding.
Source: Census Bureau, U.S. Department of Commerce. Calculations: Reed Construction Data

There are serious impediments that heavy engineering construction has to overcome. These include cutbacks in funding from the government for repair and maintenance of infrastructure, as well as new projects. Offsetting this is the continued growth of the U.S. economy combined with low long-term interest rates encouraging business investment.

Heavy engineering construction spending is projected to advance 6.8% in 2012, 4.6% in 2013, and 6.6% in 2014.

U.S. Heavy Engineering (Non-Building) Construction
(billions of U.S. current dollars)

  Actual Forecast
  2009 2010 2011 2012 2013 2014
Transportation 36.7 38.3 34.9 36.6 41.0 44.8
   Year-over-year % Change 3.5% 4.5% -9.1% 5.0% 11.9% 9.2%
Communication 19.8 17.7 17.5 17.2 18.8 20.2
-25.4% -10.2% -1.1% -1.8% 9.4% 7.0%
Power 88.9 77.9 74.0 90.6 90.0 95.6
  9.6% -12.3% -5.1% 22.5% -0.7% 6.1%
Highway 82.2 82.5 78.9 80.6 87.5 93.5
1.0% 0.4% -4.4% 2.2% 8.6% 6.8%
Water and Sewer 40.3 41.3 36.8 35.4 35.4 37.0
  -5.1% 2.5% -11.0% -3.7% -0.1% 4.7%
Conservation & Development 5.8 7.2 7.4 6.0 5.8 6.0
9.9% 24.7% 2.8% -19.2% -2.6% 3.6%
Total (1) 273.5 265.0 249.4 266.4 278.6 297.0
0.5% -3.1% -5.9% 6.8% 4.6% 6.6%

(1) Total may not equal the sum of its components due to rounding.
Source: Census Bureau, U.S. Department of Commerce. Forecast: Reed Construction Data.

by Bernie Markstein

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