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Stimulus is stimulating, but there isn’t much else going on

Date Posted: May 28 2010

U.S. construction industry activity dropped 9 percent from March to April, and through the first four months of the year, was essentially flat compared to the same period a year ago.

“The public works sector is the one bright spot for construction, helped by the broadening expansion across project types that’s taking place this year,” said Robert Murray, vice president of economic affairs for McGraw-Hill Construction, in the report released May 20.

U.S. construction spending dropped to $397.6 billion in April. Much of the decline, McGraw-Hill said, was due to a pullback for nonresidential building, “which in recent months had appeared to be stabilizing after the steep downturn experienced in 2009. The housing sector also lost momentum in April, slipping back after recent gains.”

“The April decline indicates that the construction start statistics remain in an up-and-down pattern, in contrast to what appeared earlier to be evidence that a modest upward trend was taking hold,” Murray said. “The commercial building market is still beset by rising vacancies, and it will take some time before the improving employment picture helps vacancies to recede.  Tight state and local fiscal conditions are having a dampening impact on the institutional building market.  The housing upturn is still in its early stages, subject to the occasional setback.”

By region, the 12 months ending April 2010 showed the following behavior for total construction relative to the previous twelve months – the Northeast, up 1%; the South Atlantic and South Central, each down 14%; the West, down 16%; and the Midwest, down 24%.