By CityTownInfo.com Staff
August 4, 2009
The folks in hardhats, the building supply stores, and the cook at the local eatery may not have felt it yet, but construction rose slightly in June, the second such increase in three months.
Figures released this week from U.S. Department of Commerce show a slight uptick of construction spending in June estimated at a seasonally adjusted annual rate of $965.7 billion, 0.3 percent above the revised May estimate of $963.2 billion.
In what may reflect early effects of this spring's federal economic stimulus package, public construction led the modest increase, up to $321.7 billion, 1.0 percent above the revised May estimate of $318.5 billion. Overall, the month saw small bumps in construction for schools, highways, and even residential building projects.
What may seem to the casual observer like minute shifts in the economy are heartening some analysts. They join the positive news in recent days that June also saw a rise in sales of new and existing homes, as reported by the AP in the New York Times. New home building, meanwhile, shot up by the largest amount in eight years.
In another sign of a brightening economy, a private sector index of U.S. manufacturing shows the production dipping by the smallest amount in a year, as businesses ramp up some of their activity to resupply distributors. The Institute for Supply Management noted the July figures, amid growth in the entire economy over the past three months.
Though it remains cautious in its projections, ISM views current indicators as pointing to some economic recovery this year. "Overall, it would be difficult to convince many manufacturers that we are on the brink of recovery, but the data suggests that we will see growth in the third quarter if the trends continue", said ISM chair Norbert J. Ore in a statement from the group.
"What we're going into is the very initial phases of recovery," the chief U.S. financial economist for IHS Global Insight, Brian Bethune, told the Washington Post . "Clearly, we're at a turning point now."
On the minus side of the economic ledger, construction has not come close to catching up from pre-recession levels. June's construction spending remains 10.2 percent below the June 2008 estimate of $1,075.6 billion.
As for the people in the hard hats and ancillary businesses, hiring has not kept pace with reported spending in the building sector. A survey of 352 U.S. metropolitan areas by the Associated General Contractors of America found that some 94 percent of these communities were still hemorrhaging construction jobs in June. Indeed, over 200 areas endured double-digit percentage drops in this type of employment, as reported in SmartBrief.
Amid these mixed but increasingly hopeful economic omens, trend spotters will be watching for construction figures for July, due out from the Commerce Department on Sept. 1.
