Contractors: Activity Declines
Construction activity weakens in 2007; Declines continue in 2008
Although the construction industry has grown quite steadily in recent decades, the market seems to have reached the conclusion of its expansion boom. The overall construction industry declined in 2007—the first annual drop since the early 1990s. However, the decrease wasn’t experienced in all segments of the industry, as the nonresidential and nonbuilding segments experienced positive gains in 2007.
It was the new housing sector that took a great plunge in 2007, overriding the high rates of growth witnessed in other construction segments. On a year-to-year basis, existing home sales declined in 2006—the first time in more than a decade. In the following year, sales of existing home fell precipitously. It is believed that the housing market will begin to improve in 2009 and beyond.
According to the U.S. Census Bureau of the Department of Commerce, construction spending throughout August 2008 was estimated at a seasonally adjusted annual rate of just more than $1 trillion, nearly the same level of spending reported in July. August 2008 construction spending was 5.9 percent (±1.9 percent) below the spending levels reported in August 2007. For the eight-month period ending August 31, 2008, construction spending was 5.9 percent (±1.4 percent) below the same period in 2007, or $713.5 billion in dollar terms.