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Heavy Engineering (Non-Building) Construction Spending Drops Again in February

0 2911 Market Intelligence

Heavy engineering (non-building) construction spending dropped 1.9% on a seasonally adjusted (SA) basis in February after falling 0.9% in January. On a year-to-date not seasonally adjusted (NSA) basis, heavy engineering spending increased 7.9% from the same period in 2011.

Heavy engineering (non-building) construction spending dropped 1.9% on a seasonally adjusted (SA) basis in February after falling 0.9% in January. On a year-to-date not seasonally adjusted (NSA) basis, heavy engineering spending increased 7.9% from the same period in 2011. All of the major heavy engineering spending categories were down for the month, although all except transportation and conservation and development were up on a year-to-date basis compared to a year ago. (Transportation was down 4.2% and conservation and development 20.6%.) Power construction spending, despite falling 1.6% (NSA) in February and 2.8% in January, was up 22.9% year-to-date compared to a year ago.

Although continuing improvement in the economy will bolster spending by private industry on heavy engineering construction projects, significant drag is expected from reduction in government spending. Congress continues to struggle with transportation funding. At the end of March a 90-day extension of transportation funding was passed, the ninth temporary extension to take effect since the last long-term funding authorization expired in September 2009. Over the past few months we have been lowering our forecast of government spending for infrastructure due to the politics surrounding such issues as enacting reasonable long-term transportation funding. As a result of this, downward revisions in the December and January data, and lower spending in February, we reduced our forecast of highway spending growth in 2012 from 6.4% last month to this month’s 1.6%.

Taking all these factors into consideration, the forecast is for heavy engineering projects construction spending to increase 4.4% in 2012, down from last month’s 7.7%, and 2.6% in 2013, down from 3.3% last month.

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

  Monthly Figures*
(latest actual values)
3-Month
Moving Average
Actual Forecast
  Dec-11 Jan-12 Feb-12 Dec-11 Jan-12 Feb-12 2008 2009 2010 2011 2012 2013
Transportation 34.883 35.218 34.542 34.588 34.831 34.881 35.471 36.701 38.232 35.543 35.128 37.155
  Month-over-Month % Change 1.4% 1.0% -1.9% -0.3% 0.7% 0.1%            
  Year-over-year % Change (NSA) -7.6% -4.5% -3.9%       11.3% 3.5% 4.2% -7.0% -1.2% 5.8%
Communication 18.005 17.915 17.525 17.450 17.599 17.815 26.487 19.753 18.261 17.817 18.135 20.059
  6.7% -0.5% -2.2% -0.3% 0.9% 1.2%            
  -3.5% 6.5% 0.8%       -4.0% -25.4% -7.6% -2.4% 1.8% 10.6%
Power 102.161 99.323 97.693 98.607 100.092 99.726 81.075 88.861 78.540 89.884 100.438 100.469
  3.4% -2.8% -1.6% 3.5% 1.5% -0.4%            
  13.3% 23.3% 22.4%       22.7% 9.6% -11.6% 14.4% 11.7% 0.0%
Highway 82.428 81.629 79.440 82.299 82.286 81.166 81.361 82.166 82.657 78.771 80.027 81.673
  -0.5% -1.0% -2.7% 0.6% 0.0% -1.4%            
  -0.3% 4.0% 4.5%       6.1% 1.0% 0.6% -4.7% 1.6% 2.1%
Water and Sewer 37.869 38.609 38.338 37.434 38.016 38.272 42.448 40.301 41.368 37.240 38.382 39.893
  0.8% 2.0% -0.7% 0.8% 1.6% 0.7%            
  -5.7% -1.4% 1.6%       4.4% -5.1% 2.6% -10.0% 3.1% 3.9%
Conservation & Development 5.970 5.950 5.801 6.334 6.077 5.907 5.234 5.750 6.937 6.929 5.806 5.852
  -5.4% -0.3% -2.5% -3.0% -4.1% -2.8%            
  -15.8% -18.1% -23.0%       -0.5% 9.9% 20.6% -0.1% -16.2% 0.8%
Total** 281.316 278.644 273.339 276.712 278.901 277.766 272.076 273.532 265.995 266.184 277.916 285.101
  1.7% -0.9% -1.9% 1.4% 0.8% -0.4%            
  2.3% 8.1% 7.8%       9.7% 0.5% -2.8% 0.1% 4.4% 2.6%

* 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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