Public Construction Spending Could Rebound Soon

on . Posted in US and local economic forecasts

Despite the recent positive developments in both the residential and commercial construction markets, there's one area where construction projects still haven't truly begun to rebound to pre-Great Recession levels: public jobs funded by various levels of government. While local, state and federal authorities are all still funding infrastructure improvements and building new structures, the overall amount of building simply hasn't recovered. Projects are often addressed only when they become dire needs, and less proactive construction, such as road improvements, is occurring. However, Business Insider reported some interesting statistics that may indicate an upward surge in this part of the construction market. Namely, dealers of Caterpillar equipment believe the market for government construction has hit its bottom and will soon rebound.

There isn't much hard evidence as of yet that the market for public building will turn around, but indicators in other parts of the economy are starting to paint a positive picture. For example, spending on projects of all types grew at a seasonally adjust rate for much of the last year - putting aside the extended severe weather that caused widespread economic slowdown this winter. As the Boston Business Journal pointed out, year-over-year growth isn't just keeping pace with the positive developments of 2013 and 2012, it's exceeding them.

Government building can lead to many more construction jobs
The unique attributes of contracting work for all levels of government make the potential rebound of that market segment especially important to builders. While developers may own enough land to build dozens of houses and large-scale urban construction can lead to long-term work for crews, the amount of land and infrastructure that the combined levels of government control is staggering. If the market for these jobs was to improve and the purse strings of small cities and entire states could open more readily, contractors would have work, from repaving to constructing schools and municipal buildings and everything in between.

The development of that market may still take a significant amount of time, however. While government agencies will continue to address large problems, make repairs to major pieces of infrastructure and occasionally contract out work to build new structures, it could take years for overall spending in public construction to swing back to prerecession levels.

 

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