WASHINGTON, D.C. – Recent construction reports from the U.S. Census Bureau could be good news for landscape contractors focused on the commercial market, but the government's research uncovered potential cause for concern among contractors focused on the residential market.
CONSTRUCTION SPENDING UP. An indicator of immediate business opportunities for landscape contractors, construction spending rose in March for the sixth consecutive month, according to the Bureau. The increase was boosted by good weather conditions, which advanced highway completions. Single-family homebuilding (residential properties) was static, while apartment completions (commercial properties) surged.
Construction spending, also known as construction put in place, during March 2000 was estimated at a seasonally adjusted annual rate of $765.2 billion, 1 percent above the revised February estimate of $754.8 billion, according to the Bureau. The March figure represents a 7 percent increase compared to March 1999.
Construction spending reports the dollar value of newly completed structures. Buildings are not recorded in the data until they are completed; therefore, construction spending data is actually a lagging indicator of construction activity but a direct indicator of current potential business opportunities for landscape contractors. The higher the rate of construction put in place, the higher the number of completed properties that need landscaped and maintained.
Contractors who focus more on commercial properties should be especially pleased to learn that the March rate of public construction spending was $178.4 billion, up 3 percent from the revised February estimate of $173.5 billion. However, predominantly residential contractors should also note the continued increase in new residential housing units. Residential spending was at a seasonally adjusted annual rate of $261.0 billion in March, 1 percent above the revised February estimate of $258.4 billion.
PERMIT ISSUANCE DOWN. Permit issuance for residential structures and non-residential construction starts is a more useful statistic for indicating non-completed construction activity. Therefore, it is also useful for predicting future potential landscaping clients.
Unfortunately, at 1,579,000, the seasonally adjusted annual rate of housing units authorized by building permits in March was 4 percent below the revised February rate of 1,653,000 and 5 percent below the March 1999 estimate of 1,654,000. During the first three months of 2000, 363,200 housing units were authorized compared with 373,700 units for the same period in 1999, a decrease of 3 percent.
The above statistics are just indicators of the current state of construction spending. The Census Bureau states, "In interpreting changes in the statistics in this release, note that month-to-month changes in seasonally adjusted statistics often show movements which may be irregular. It may take three months to establish an underlying trend for total construction and as long as eight months for specific categories of construction."
To see how these current statistics are matching up to the CMD Group’s 2000 construction forecast, please click here: Construction Outlook for 2000 and Beyond.