Heavy Engineering (Non-Building) Construction Spending Slips in January

03/26/2012 by Bernard M. Markstein

Heavy engineering (non-building) construction spending fell a slight 0.2% in January, ending five consecutive monthly increases, after advancing 1.7% in December. On a year-over-year basis, January heavy engineering spending increased 8.5%. Transportation and water and sewer were the only major heavy engineering spending categories that increased for the month, up 1.0% and 2.9%, respectively. Spending on power construction fell for the first time in six months, down 1.5% after increasing 2.5% in December. Nevertheless, power spending in January was up 23.0% compared to January 2011.

Continuing improvement in the economy will bolster spending by private industry on heavy engineering construction projects, offsetting some of the expected reduction in government spending. Congress continues to struggle with transportation funding. However, the Senate has passed, with difficulty, legislation providing $109 billion in funding over two years. This falls well short of the House version that would provide $260 billion in funding over five years. At present, it looks like the compromise legislation most likely to pass will be close to the Senate version. There is a high probability that a continuing resolution funding highway construction for 90 days will be enacted so that the two chambers can resolve their differences between the two versions in a more leisurely fashion. There is some possibility that the House will simply pass the Senate version by March 31 when funding would run out, but we do not pin much hope on this outcome.

Taking all these factors into consideration, the forecast is for heavy engineering projects construction spending to increase 7.7% in 2012 and 3.3% 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
  Nov-11 Dec-11 Jan-12 Nov-11 Dec-11 Jan-12 2008 2009 2010 2011 2012 2013
Transportation 34.392 34.674 35.013 34.684 34.518 34.693 35.471 36.701 38.232 35.519 35.451 37.497
  Month-over-Month % Change -0.3% 0.8% 1.0% -1.3% -0.5% 0.5%            
  Year-over-year % Change (NSA) -6.1% -8.4% -4.9%       11.3% 3.5% 4.2% -7.1% -0.2% 5.8%
Communication 16.877 18.022 17.884 17.501 17.455 17.594 26.487 19.753 18.261 17.817 18.486 20.631
  -3.4% 6.8% -0.8% -1.6% -0.3% 0.8%            
  -10.0% -3.5% 6.1%       -4.0% -25.4% -7.6% -2.4% 3.8% 11.6%
Power 98.792 101.249 99.689 95.258 98.303 99.910 81.075 88.861 78.540 89.682 104.077 104.812
  4.1% 2.5% -1.5% 3.2% 3.2% 1.6%            
  8.3% 10.9% 23.0%       22.7% 9.6% -11.6% 14.2% 16.1% 0.7%
Highway 82.801 83.882 83.783 81.823 82.784 83.489 81.361 82.166 82.657 78.873 83.932 85.877
  1.4% 1.3% -0.1% 1.7% 1.2% 0.9%            
  -2.0% 1.8% 7.2%       6.1% 1.0% 0.6% -4.6% 6.4% 2.3%
Water and Sewer 37.569 37.420 38.507 37.133 37.284 37.832 42.448 40.301 41.368 37.197 38.718 41.243
  1.9% -0.4% 2.9% 0.3% 0.4% 1.5%            
  -8.0% -7.1% -1.9%       4.4% -5.1% 2.6% -10.1% 4.1% 6.5%
Conservation & Development 6.312 6.108 5.988 6.531 6.380 6.136 5.234 5.750 6.937 6.943 5.983 6.030
  -6.1% -3.2% -2.0% -3.6% -2.3% -3.8%            
  -18.8% -13.5% -17.8%       -0.5% 9.9% 20.6% 0.1% -13.8% 0.8%
Total** 276.743 281.355 280.864 272.930 276.725 279.654 272.076 273.532 265.995 266.031 286.646 296.090
  1.7% 1.7% -0.2% 1.3% 1.4% 1.1%            
  -0.9% 1.7% 8.5%       9.7% 0.5% -2.8% 0.0% 7.7% 3.3%

* 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.

Read more forecasts from Reed Construction Data:

Construction Spending Begins the Year on a Downer
Nonresidential Building Construction Falls in January
New Residential Construction Spending Continues to Improve