What This Means
“The ongoing U.S. recession has become increasingly apparent in the level of nonresidential construction activities,” said Anirban Basu, Associated Builders and Contractors (ABC) chief economist. “January data show the nonresidential construction marketplace is now deteriorating at an accelerating rate. Education was the only subsector of the 16 that reported a monthly gain in nonresidential construction put-in-place activities, posting an increase of less than one percent. By contrast, monthly losses in several key subsectors were quite deep, including power and health care. Moreover, subsectors that have been lifting the industries’ fortunes in recent months have now begun to weigh on the industry, including manufacturing, which is down for the month of January.
“Even with the recently passed stimulus package, the near-term outlook for most nonresidential construction activities remains bleak, and as contractors continue to work through their accumulated backlogs, more participants in the marketplace are likely to experience cash flow issues,” Basu added. “Fortunately, there are several positive elements in the economic environment, including the infrastructure component of the stimulus package, ongoing military-related construction in many parts of the United States and falling construction input prices.”