The new year started on a down note for private nonresidential construction as spending fell 2.1 percent in January, according to the March 1 report by the U.S. Census Bureau. On a year-over-year basis, private nonresidential construction was 19.9 percent lower. Total nonresidential construction spending slipped 1.4 percent in January and was down 10.6 percent from the same time last year.  

“Today's data on construction spending indicates that 2010 is off to a particularly slow start,” said ABC Chief Economist Anirban Basu. “To the extent that there was any evidence of momentum, it was primarily due to government involvement at the federal, state and local levels.”  

Thirteen of the 16 nonresidential construction subsectors had decreased spending in January.  Those that showed the largest monthly decrease were lodging, down 9.8 percent; water supply, down 7 percent; communication, down 6 percent; and manufacturing-related construction, down 4.8 percent. On a year-over-year basis, lodging and manufacturing-related construction were also among the subsectors that showed the largest drop in spending, falling 45.5 percent and 28.5 percent respectively, with commercial construction (down 32 percent) and office construction (down 25 percent) rounding out the list.  

Only three of the 16 nonresidential construction subsectors increased spending in January: amusement and recreation, up 1.7 percent; power, up 1.2 percent; and highway and street construction, up 1.2 percent.  Power and highway and street construction were also among the subsectors that had higher spending compared to January 2009, up 14.2 percent and 5.6 percent, respectively, along with conservation and development (up 31.1 percent) and transportation construction (up 10.8 percent).  

“Private nonresidential segments that have not benefited from government stimulus continue to slump,” Basu said. “Some of this weakness may be attributed to the harsh winter weather in many parts of the country. However, data from future months will tell us the extent to which January's performance was seasonal as opposed to real.  

“February data will also be impacted by the weather. Therefore, any evidence of improvement in construction spending will likely have to wait until the March,” said Basu.  

In contrast, residential construction spending increased 1.1 percent for the month, but is still down 6 percent compared to January 2009. Overall, total construction spending has slowed 0.6 percent in January and was down 9.3 percent compared to the same time last year.  

To read the complete report, click here.