Construction Stands Firm As Economy's Strongest Sector

Photo credit: Photo by Vhanepfu

It’s time to give credit where it’s due: construction is now one of the economy's strongest sectors. In the second quarter alone, construction added 1.3 percentage points to the 3.7% annual GDP. IHS Global Insight US economist Patrick Newport says the sector could be the key ingredient to push the economy from a "lackluster pace of the past few years." With 5% of the GDP and spending up at a 26% annualized rate in the last three months, construction’s momentum is still going strong in Q3. But, despite total construction up 13.7% over the past year, some economists don’t believe that the growth will last, expecting an impeding “correction.” But private spending—residential and nonresidential—has been strong, driving single-family and multifamily residential developments north by double digits from last year. In addition, outlays for construction projects rose to 0.7% and an annual rate of $1.08T in July, the highest level since 2008. So, while the Dow can’t be trusted, all’s well for construction firms. For now, at least. [MW]

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