Construction Forecasts

News & Analysis

Heavy Construction Spending Rose 0.9% in June

08/10/2011 by Jim Haughey, RCD Chief Economist

Heavy construction spending increased 0.9% in June and the May gain was boosted to 1.7% with the inclusion of several new power plant projects. These gains are counter to the current declining trend in this market and are unlikely to persist. Overall, heavy spending is expected to be sluggish through 2012 but will recover to the 2009 level next year. Congress appears committed to maintain but not to increase highway funding through 2012. Average growth in the private economy has set off recovery in the communications market and will initiate recovery in the water and sewer market early in 2012.

The power market outlook will set the pace of heavy construction spending but is u fortunately fuzzy. Current generating capacity use and the subpar outlook for economic growth suggest declining spending for power plants. Construction of alternative fuel plants has moderated the decline in this sector in the last few years. Most of these require a public subsidy to be built and a government mandate to require electric distribution companies to buy the higher priced power. Enough of these projects are in planning for the power sector to expand min 2011-13. But the forecast assumes a small drop in power construction spending because some projects will fail to get federal subsidies, encounter environmental delays or resistance to their high kwh prices.

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

  Monthly Figures*
(latest actual values)
Annual Figures
  Actual Forecast
  May-11 Jun-11 2009 2010 2011 2012 2013
Transportation (% change is period
versus same period, previous year)
35.318 35.493 38.090 39.659 36.966 39.075 44.125
-13.2% -11.4% 7.4% 4.1% -6.8% 5.7% 12.9%
Communication 17.699 18.389 19.711 17.983 18.151 19.688 21.838
  -3.4% 3.7% -25.7% -8.8% 0.9% 8.5% 10.9%
Power 84.890 87.548 88.627 82.110 84.800 83.125 83.250
  16.7% 18.3% 10.2% -7.4% 3.3% -2.0% 0.2%
Highway 75.807 74.594 81.578 82.523 77.385 84.300 92.000
  -5.7% -9.1% 1.0% 1.2% -6.2% 8.9% 9.1%
Water and Sewer 37.263 37.721 40.106 40.782 38.016 41.713 47.025
  -7.7% -9.3% 91.0% 1.7% -6.8% 9.7% 12.7%
Conservation & Development 7.341 6.856 5.633 6.752 7.177 7.550 7.950
  11.3% -12.0% 7.4% 19.9% 6.3% 5.2% 5.3%
Total 258.318 260.601 273.745 269.8083 262.495 275.450 296.188
  1.4% 3.5% 1.0% -1.4% -2.7% 4.9% 7.5%

* Monthly figures are seasonally adjusted at annual rates (SAAR figures).
The total includes some miscellaneous buildings.
Actuals: U.S. Census Bureau, Department of Commerce (put-in-place investment figures).
Forecasts and table: Reed Research Group.


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