Apr 7 2010
Following steep declines last year, U.S. construction spending is projected to increase slightly in 2010, according to Fitch Ratings in a new report. In particular, U.S. public construction expenditures should continue exhibiting mild growth in 2010 thanks in part to federal stimulus spending. Residential construction spending should also mildly improve this year from depressed levels in 2009. However, ongoing pressure in the commercial real estate sector means spending on commercial projects will remain weak.
Private non-residential construction for the first two months of 2010 declined 24.7% compared to the same period last year. One of the biggest issues for commercial construction remains the availability of financing for new projects, according to Fitch Director Robert Rulla. "The real estate losses suffered by many financial institutions have led to tighter credit standards, higher borrowing costs, and lower availability of credit," said Rulla. "This will likely remain so for the short term, which may lead to cancelled or postponed construction projects with no financing currently in place."
Among the positives to be gleaned for this year are the flow of stimulus funds to public construction that should offset expected spending cuts by state and local governments as they deal with lower revenues. In particular, highway spending should benefit from a pickup in activity resulting from projects being done under the Federal stimulus package.
Source: http://www.fitchratings.com