Washington, D.C.鈥斺淣onresidential construction provided a real treat to the economy in the third quarter,鈥 Ken Simonson, Chief Economist for 上海张越老师出轨 of America (上海张越老师出轨), said today. Simonson was commenting on the October 31 reports on gross domestic product and construction spending from the Commerce Department.
鈥淣et of inflation, or real, investment in private nonresidential structures jumped 12 percent in the third quarter, the eighth straight quarter this investment category has outpaced gross domestic product growth,鈥 Simonson remarked. 鈥淵ou have to go back to the mid-1950s to find another period when private nonresidential construction was so persistently robust.
鈥淭he Census Bureau鈥檚 construction spending report was even sweeter,鈥 Simonson commented. 鈥淧rivate and public nonresidential construction climbed 1.8 percent for the month of September and 17 percent over the past 12 months. That was enough to overcome the 1.4 percent fall in residential spending for the month and nearly offset the 16 percent residential drop from 12 months ago.
鈥淭here was nothing scary in the nonresidential categories, even for credit-sensitive commercial types,鈥 Simonson observed. 鈥淎ll 16 Census categories were up for the month, and all but religious structures were higher on both a September-over-September and a year-to-date basis.
鈥淥ver the next several months, I expect investment to slow in income-producing properties such as office, hotel and retail structures,鈥 Simonson stated. 鈥淏ut accelerating investment in energy and power projects, plus continued strength in hospital and educational construction, should keep the nonresidential totals up.
鈥淢y biggest concern is higher costs,鈥 Simonson concluded. 鈥淒iesel prices, which affect contractors thorough use of offroad equipment, construction trucks and fuel surcharges on delivery of materials, are 25 percent higher than a year ago and seem poised to rise further. Other materials, especially imports, are likely to accelerate as well. And construction wage rates are going up faster than for the economy as a whole. But public agencies, from transportation departments to county councils, have failed to budget enough for construction cost escalation, and instead are trimming projects.鈥
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