Construction Forecasts

News & Analysis

Heavy Engineering (Non-Building) Construction Spending Falls in April

06/19/2012 by Bernard M. Markstein, RCD US Chief Economist

Heavy engineering (non-building) construction spending fell 0.5% on a seasonally adjusted (SA) basis in April, after inching up 0.1% in March. On a year-to-date not seasonally adjusted (NSA) basis, heavy engineering spending increased 5.7% from 2011. Only two of the major heavy engineering spending categories were up for the month—transportation (+2.1%) and highway (+0.4%) construction spending. Also, on a year-to-date basis just two construction spending categories were up compared to a year ago—power (+20.3%) and highway (+0.6%).

Reduction in government funding for infrastructure projects continues to be the biggest threat to heavy engineering construction spending. Growth in the national economy will lead to spending by private industry on heavy engineering construction projects, offsetting (just barely) the cuts in government spending. Congress continues to struggle with transportation funding. The nation is now approaching the expiration of the last extension of transportation funding passed in March at the end of June. It is unlikely that any long-term funding will be forthcoming before the November elections, meaning another temporary extension in the next week or two.

Taking all these factors into consideration, the forecast is for heavy engineering projects construction spending to increase 2.0% in 2012 and 2.2% in 2013.

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

  Monthly Figures*
(latest actual values)
3-Month
Moving Average
Actual Forecast
  Feb-12 Mar-12 Apr-12 Feb-12 Mar-12 Apr-12 2008 2009 2010 2011 2012 2013
Transportation 35.0 35.5 36.2 35.1 35.3 35.6 35.5 36.7 38.2 35.5 36.5 39.2
  Month-over-Month
  % Change
-1.0% 1.4% 2.1% 0.6% 0.6% 0.8%            
  Year-over-year
  % Change (NSA)
-2.4% -4.7% 0.3%       11.3% 3.5% 4.2% -7.0% 2.6% 7.4%
Communication 17.3 17.5 17.3 17.6 17.5 17.4 26.5 19.8 18.3 17.8 17.9 19.8
  -1.5% 0.9% -1.1% 0.9% -1.0% -0.6%            
  -0.3% -6.1% -4.9%       -4.0% -25.4% -7.6% -2.4% 0.2% 10.6%
Power 97.7 97.7 96.4 99.5 98.0 97.2 81.1 88.9 78.5 89.9 97.6 96.6
  -1.0% 0.0% -1.3% -0.4% -1.5% -0.8%            
  22.6% 19.5% 16.6%       22.7% 9.6% -11.6% 14.4% 8.6% -1.0%
Highway 76.2 77.2 77.5 78.6 76.9 77.0 81.4 82.2 82.7 78.8 77.1 78.8
  -1.2% 1.2% 0.4% -2.7% -2.2% 0.1%            
  0.9% -1.8% 4.0%       6.1% 1.0% 0.6% -4.7% -2.1% 2.2%
Water and Sewer 38.2 36.8 36.2 38.2 37.8 37.1 42.4 40.3 41.4 37.2 36.7 37.3
  -0.9% -3.7% -1.6% 0.5% -0.9% -2.0%            
  1.6% -2.8% -1.4%       4.4% -5.1% 2.6% -10.0% -1.5% 1.6%
Conservation & Development 5.8 5.8 5.5 5.9 5.9 5.7 5.2 5.8 6.9 6.9 5.7 5.7
  -2.7% 0.5% -4.9% -2.8% -0.8% -2.3%            
  -22.8% -22.4% -22.9%       -0.5% 9.9% 20.6% -0.1% -18.3% 0.2%
Total** 270.2 270.4 269.1 274.9 271.3 269.9 272.1 273.5 266.0 266.2 271.4 277.3
  -2.9% -1.4% -0.3% 0.1% -0.9% -1.5%            
  7.3% 4.1% 5.1%       9.7% 0.5% -2.8% 0.1% 2.0% 2.2%

* Monthly figures are seasonally adjusted at annual rates (SAAR figures).
** The total includes some miscellaneous buildings.
Source: Census Bureau, U.S. Department of Commerce. Forecast: Reed Construction Data.


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