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Heavy Engineering (Non-Building) Construction Ends the Year Strongly

0 2921 Market Intelligence

Heavy engineering (non-building) construction spending rose 2.0% in December after advancing 1.8% in November, marking its fifth consecutive monthly increase. For 2011, heavy engineering spending was almost unchanged, down a slight 0.1% from 2010. All major heavy engineering spending categories except conservation and development moved up in December.

Heavy engineering (non-building) construction spending rose 2.0% in December after advancing 1.8% in November, marking its fifth consecutive monthly increase. For 2011, heavy engineering spending was almost unchanged, down a slight 0.1% from 2010. All major heavy engineering spending categories except conservation and development moved up in December. Spending on power construction advanced for the fifth month in a row, posting a solid 2.7% increase after rising an even stronger 3.7% in November. Power spending has risen in nine of the last ten months and was up 14.0% for 2011, the only heavy engineering category to increase for the year.

With the economy projected to continue improving, the heavy engineering construction sector is expected to remain on an expansion path. Although there is pressure at the federal level to reduce the deficit, the nation’s infrastructure needs are as great as ever. Recent passage of the FAA reauthorization bill indicates that Congress is capable of enacting much needed legislation for long-term infrastructure funding. However, the huge gap between the House’s $260 billion transportation bill and the Senate’s $109 billion version does not bode well for real progress on funding for surface transportation.

Taking all these factors into consideration, the forecast is for heavy engineering projects construction spending to increase 9.2% 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
  Oct-11 Nov-11 Dec-11 Oct-11 Nov-11 Dec-11 2008 2009 2010 2011 2012 2013
Transportation 34.488 34.022 34.302 35.149 34.561 34.271 35.471 36.701 38.232 35.438 35.114 37.140
  Month-over-Month % Change -1.9% -1.4% 0.8% 0.3% -1.7% -0.8%            
  Year-over-year % Change (NSA) -9.5% -7.6% -9.6%       11.3% 3.5% 4.2% -7.3% -0.9% 5.8%
Communication 17.467 16.883 18.002 17.794 17.503 17.451 26.487 19.753 18.261 17.817 18.396 20.531
  -3.8% -3.3% 6.6% -1.7% -1.6% -0.3%            
  -4.4% -10.0% -3.5%       -4.0% -25.4% -7.6% -2.4% 3.2% 11.6%
Power 94.869 98.378 101.045 92.311 95.120 98.097 81.075 88.861 78.540 89.528 107.274 108.032
  3.0% 3.7% 2.7% 2.4% 3.0% 3.1%            
  13.5% 7.5% 9.8%       22.7% 9.6% -11.6% 14.0% 19.8% 0.7%
Highway 81.668 82.973 84.497 80.432 81.881 83.046 81.361 82.166 82.657 78.881 84.801 86.767
  0.8% 1.6% 1.8% 2.4% 1.8% 1.4%            
  -5.3% -2.3% 2.3%       6.1% 1.0% 0.6% -4.6% 7.5% 2.3%
Water and Sewer 36.863 37.235 37.347 37.020 37.022 37.148 42.448 40.301 41.368 37.178 38.399 40.903
  -0.3% 1.0% 0.3% -0.1% 0.0% 0.3%            
  -13.3% -8.8% -6.8%       4.4% -5.1% 2.6% -10.1% 3.3% 6.5%
Conservation & Development 6.721 6.197 6.118 6.774 6.492 6.345 5.234 5.750 6.937 6.926 6.254 6.367
  2.5% -7.8% -1.3% 0.1% -4.2% -2.3%            
  -8.5% -21.3% -13.5%       -0.5% 9.9% 20.6% -0.2% -9.7% 1.8%
Total** 272.076 275.688 281.311 269.480 272.579 276.358 272.076 273.532 265.995 265.768 290.238 299.740
  0.8% 1.3% 2.0% 1.4% 1.1% 1.4%            
  -1.4% -1.6% 1.3%       9.7% 0.5% -2.8% -0.1% 9.2% 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.

by Bernie Markstein

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