Construction spending dips in July, rises year over year

National construction spending dropped in July from June despite year-over-year growth, according to the Associated General Contractors of America (AGC), a construction industry trade group.

Total construction spending dropped 0.9 percent for the month, but rose 9.3 percent from July 2011. Private residential spending slid 1.6 percent for the month, but increased 19 percent from July 2011. The single-family segment increased for the fourth straight month by 1.5 percent and 19 percent from July 2011.

While private construction spending rose from 2011, public construction spending fell 0.4 percent in July from the previous month and 0.7 percent from last year.

“The July spending numbers send a very mixed message,” AGC Chief Economist Ken Simonson said in a news release. “Construction of new homes, apartments,and most private nonresidential structures appears to be driving gains in construction activity even as the public sector continues to drag on the broader sector growth.”

Public construction remains plagued with budget woes, especially for local governments and school districts, Simonson said.  Spending on road work dropped 0.3 percent, but rose 5.2 percent over 12 months. Spending on education projects dropped 0.6 percent in July and 5 percent from last year.

Public construction will remain a drag on the industry unless government takes action, AGC officials said. They also said Washington officials need to address chronic funding imbalances for a host of infrastructure programs.

“The success of the newly built flood-control structures in protecting New Orleans from Hurricane Isaac is a good reminder of the wisdom and value of infrastructure investments,” said Stephen Sandherr, AGC CEO. “It costs far less to protect a city than it does to rebuild it.”

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