Developer-financed construction is shriveling. The latest monthly figures from the Census Bureau on construction spending show big downturns in May from April and from May 2008 in categories that typically rely heavily on bank financing. (The percentages are calculated from numbers that are seasonally adjusted, to account for normal month-to-month variation.)Private office construction spending eked out a gain of 0.1 percent from April but sank 18 percent from a year ago. Lodging sank 2.6 percent and 17 percent. Warehouse construction was off 6 percent and 36 percent. Retail construction was down 6 percent and 31 percent. Multifamily plunged 9.6 percent and 29 percent.These results are consistent with responses sent by Data DIGest readers in the past two months, who universally reported no improvement in credit conditions since the lending spigot was snapped shut last fall.In contrast, the municipal-bond market, which also was moribund in September, has come back to life. The American Recovery and Reinvestment Act included several new, expanded or extended bond provisions that have helped, notably "Build America Bonds."To report your experiences, good or bad, with bank, corporate or government financing, send an email to simonsonk@agc.org.

In light of recent job loss figures, AGC's chief executive officer Steve Sandherr urged the administration and Congress to stimulate new commercial lending and hasten non-transportation stimulus construction projects that have yet to begin.

AGC's chief economist Ken Simonson was quoted in Tuesday's New York Times.  Simonson commented on the effect of the recession and interest rates on the multi-family housing industry.

AGC released employment data last week that underscored the need for speedy distribution of stimulus funds.  According to AGC's chief economist Ken Simonson, construction employment fell in 288 of the nation's largest 311 metro areas from April 2008 to April 2009.A detailed chart of the data by area is available here.  A variety of media outlets covered this news, including the Austin Business Journal and the Associated Press.For more information, contact Ken Simonson at (703) 837-5313 or simonsonk@agc.org.

More and more construction firms report winning stimulus contracts that are enabling them to add employees and avoid expected layoffs. But the stimulus money is not enough to overcome the fall in private and state and local-funded projects. Meanwhile, the Buy American provision in the American Recovery and Reinvestment Act (ARRA) threatens to undercut the job gains.The Bureau of Labor Statistics reported on June 5 that construction employment fell by 59,000, seasonally adjusted, in May. Dismal as this number sounds, it was only half as great a job loss as in recent months. Recent job losses in residential construction, while still proportionately worse than in nonresidential construction have been moderating. Within a few months it is likely that homebuilding will stop falling and begin to add workers.Unfortunately, the downturn in nonresidential construction is likely to worsen for the rest of the year. As private projects wrap up-or get scaled back or halted in midstream-contractors have been unable to pick up new customers. And state revenue forecasts keep deteriorating, triggering further slashes to public construction budgets.A steady flow of stimulus money is showing up in highway projects. Water and wastewater construction grants looked promising as well. But some of these projects are being held up by uncertainty over Buy American language. ARRA generally requires contractors to use only U.S.-made iron, steel and materials, and to certify that they have done so.Certain key water and wastewater equipment is available only from foreign suppliers. Other items come from a single U.S. source. In some cases, contractors cannot get a certification as whether all of the components of a piece of installed equipment are U.S.-made.These problems have reportedly held up some project awards and led other water and sewer agencies to forgo stimulus money altogether. In addition, Canadian municipalities have threatened to retaliate against cities that use Buy American to keep out Canadian-made items. This step could escalate to a full-blown trade war that would lose jobs for contractors and many other businesses.AGC is pressing federal agencies to provide clarifications and waivers in order to enable stimulus to achieve its intended goal of putting people to work quickly.Please email simonsonk@agc.org if you have an example of a stimulus project that has been held up or made more expensive by Buy American provisions.

On May 19, I had the privilege, along with a handful of other members of the National Association for Business Economics, to brief Federal Reserve Chairman Ben Bernanke and Governor Dan Tarullo on the state of the economy. Thanks to the feedback many of the 12,000 subscribers to the Data DIGest have provided to my "Questions of the Week," I was able to report that some of you are now receiving some stimulus contracts and have seen an improvement in the state and local bond market, but no loosening of credit for developer-financed construction projects.I also updated the governors and staff on the changes in materials costs in the year since I gave Chairman Bernanke a copy of the Construction Inflation Alert at the last Fed briefing I attended.Later in the week, I had a chance to speak with Austan Goolsbee, a member of the President's Council of Economic Advisers and staff director of the President's Economic Recovery Advisory Board, offering to supply information on stimulus contracts and hiring. Steve Sandherr also communicated with the Board about the progress of stimulus and the possibility of additional stimulus funding.Additionally, I met with the chief statistician of the U.S. and top officials at the Census Bureau, Bureau of Labor Statistics and the Bureau of Economic Analysis, providing each with suggestions of data that would be useful for the construction industry and for public agencies concerned about construction costs or jobs.AGC was the only construction-related representative in these meetings. In each of these cases, your feedback and suggestions enabled AGC to provide specific facts and ideas to better inform policy makers. Keep those emails coming to simonsonk@agc.org!For more information, contact Ken Simonson at (703) 837-5313 or simonsonk@agc.org.

AGC's chief economist Ken Simonson explained in a statement that the recent Associated Press story on stimulus transportation funds fails to acknowledge several unique facts about the construction industry.  The AP story does not consider that construction jobs are not site-specific and that workers will spend income in their hometown, among other factors.

In a recent interview with Reuters News, AGC's chief economist Ken Simonson said that he expected growth in the second quarter due to a "sharp drop in business inventories."  The article, ISRI-Analysts see US economy bottoming, vary on how long, presented the views of several leading economists, and Simonson's outlook was the most positive.

It is growing more likely that real (inflation-adjusted) gross domestic product (GDP) will rise slightly in the quarter that began on April 1 from the dismal levels of the first quarter. The growth is likely to pick up gradually through the rest of the year. But it will be very uneven, unlike the downturn, which affected all sectors.Tax withholding was reduced on April 1 and unemployment benefits were increased and extended in duration. These factors alone may be enough to help raise consumer spending, which accounts for 70% of GDP. Federal government purchases of goods and services should rise enough to offset declining state and local spending as the stimulus outlays for construction begin. But business investment and net exports, the other components of GDP, may continue shrinking into next year.For the next few quarters, the only action in construction is likely to be in power (power plants, transmission lines, wind farms), military base realignment work and a growing number and variety of stimulus-funded projects. The next segment of construction to revive is likely to be single-family homebuilding, perhaps before the end of 2009. With 30-year fixed mortgage rates now at an all-time low of 4-3/4 percent and tax credits available from Uncle Sam and the state of California, more people will be able to afford homes.By early next year, retail construction should resume, although much of it will consist of renovating existing stores for new tenants.  However, other types of private, state and local-funded construction may remain dormant until late 2010 or beyond.For more information, contact Ken Simonson at (703) 837-5313 or simonsonk@agc.org.

AGC chief economist Ken Simonson spoke to Reuters reporters regarding construction job loss, which he expects to remain negative until the end of this year. Read the article here.