Heavy sector poised for stronger growth in 1999-2000
By Daryl Delano -- Industrial Distribution, 5/1/1999
Overall nonbuilding construction spending grew only slightly during 1998, but was on the upswing as the year came to a close. And the Commerce Department's preliminary estimate of spending for heavy construction work during January 1999 suggests that the momentum has carried over into this year.Overall nonbuilding construction -- public and private combined -- was 2.4% greater during the last three months of 1998 than during the final quarter of 1997. This represented a marked improvement from the trends established earlier in the year; third-quarter 1998 spending was unchanged from a year earlier, and the value of second-quarter heavy construction work had come in 0.3% lower than during 1997's second quarter.
Publicly funded nonbuilding construction work declined throughout most of 1998, but fourth-quarter spending eked out a 0.8% gain from the same three months of 1997. The first three quarters of 1998 had all seen public nonbuilding construction spending fall short of totals for the comparable period a year earlier. Privately funded heavy construction activity was much stronger than public work during the final quarter of 1998-and, in fact, throughout all of 1998. Fourth-quarter 1998 private nonbuilding spending was at a level 5.6% above the October-December 1997 total. This represented a better annual rate of growth than that recorded over the preceding two quarters, but it wasn't nearly as strong as the 11.1% gain registered during the first quarter of the year.
For all of 1998, total nonbuilding construction work was valued at an estimated $124.661 billion, or just 0.6% above the 1997 total. Heavy construction had expanded at a similar rate during 1996, but by a much stronger 4.8% rate in 1997. The publicly funded portion saw spending decline by 2.0% over the year. The one bright light on the public side was the water/sewer sub-sector where spending grew by a modest 2.3%, or about the same as in 1997. The privately funded portion-a bit more than a third of the heavy construction total-grew by 6.0% in 1998, a significant improvement over the past few years. Total private nonbuilding work declined by almost 6% in 1996 before expanding by a modest 2.3% during 1997.
We're forecasting a 5% gain in total heavy construction spending this year and 4.7% growth next year.
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