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New Single-Family and Multifamily Construction Both Retreat, Along with Worsening Slump in Road, School and Federal Spending; Association Official Urges Lawmakers to Make Infrastructure Spending a Priority

Total construction spending cooled in June as residential building hit the pause button, while private nonresidential and public construction also declined, according to an analysis of new Census Bureau data by the Associated General Contractors of America. Association officials urged lawmakers in Washington to make infrastructure investment a top federal priority for the fiscal year beginning in October.

“New single-family and multifamily construction both had rare slowdowns in June, while private nonresidential construction remained stuck in neutral as it has all year and the long slump in public construction worsened,” said Ken Simonson, the association's chief economist. “For the rest of 2013, private construction appears likely to grow again but public spending is showing no signs of a recovery.”

Construction put in place totaled $884 billion in June, down 0.6 percent from May but up 3.3 percent from June 2012. Those earlier figures included steep upward revisions to residential improvements as the Census Bureau corrected improvements data back to January 2012. Despite the dip in June, spending that month was still the second-highest level since August 2009.

Private residential spending was flat for the month and 18 percent higher than in June 2012. New single-family construction slid 0.8 percent in June but was 28 percent above the year-ago mark. New multifamily spending fell 3.3 percent in June but shot up 41 percent year-over-year.

Private nonresidential spending slipped 0.9 percent in June and rose 1.4 percent year-over-year. Public construction spending shrank 1.1 percent for the month and 9.3 percent over 12 months.

“The major private nonresidential segments show divergent trends,” Simonson said. “Power construction, which includes oil and gas fields and pipelines as well as electricity, climbed for the fifth straight month in June, even after Census posted large upward revisions for May and April. But such major categories as manufacturing, health care and retail construction remain in the doldrums. Meanwhile, the largest public categories—highways and education construction—are now plummeting at double-digit rates.”

Association officials warned that the plunge in public construction will worsen unless policy makers in Washington can produce a budget that puts more money into vitally needed highway, water and other infrastructure projects. They noted that spending on federal projects in June was at the lowest level since September 2008 and was 29 percent below its latest peak in August 2011.

“Infrastructure spending is essential for economic growth, health and safety,” said Stephen E. Sandherr, the association’s chief executive officer. “Congress should make adequate funding for infrastructure a top priority next month when it works on appropriations bills to fund the government for the year beginning in October.”