Analysis
“The transition from publicly financed activities to privately financed ones continues,” said Associated Builders and Contractors Chief Economist Anirban Basu. “In contrast to the trends of the past year, construction related to lodging, office and manufacturing was up in March, an indication that the economic recovery that began in mid-2009 is finally beginning to influence the nation's nonresidential construction sector.
“Of course, skeptics are likely to point out that observed improvement in construction volumes between February and March may largely be a reflection of seasonal factors rather than economic ones,” said Basu. “It is true that February's harsh winter conditions in much of the nation were not conducive to ongoing construction and that at least part of the monthly recovery is related purely to the weather.
“However, despite the recent uptick in privately financed construction, publicly financed construction continues to remain strong. One year ago, publicly financed construction represented 51.4 percent of total nonresidential construction spending. In March 2011, that proportion stood at 53.4 percent, slightly down from February's corresponding statistic of 53.9 percent,” Basu said.
“It’s important to note that after recent declines in healthcare-related construction spending, healthcare construction was up in March and power-related construction expanded for two consecutive months. The expectation is that privately financed construction volumes will continue to rebound gradually into the summer even as certain publicly financed construction segments, such as public safety and education, will experience diminished spending,” said Basu.