***residential - nonresidential construction

The Commerce Department reported today that construction spending declined 3.3% in January, but for the first time since the housing bust began the drops in nonresidential construction outpaced the fall in the residential sector.

The residential construction industry has been under pressure since the housing bubble began to deflate in 2006, but nonresidential construction had held up through most on 2007 and even into early 2008. However, now it looks like nonresidential may be catching up on slowing down.

...

“The areas of power (-11.6%), communication (-7.9%) and religious structures (-10.2%) were particularly soft,” wrote economists at Nomura Research Economics. “The nonresidential structures component of GDP, previously a key source of support, is expected to fall in every quarter this year in a lagged response to the housing recession and on a slowdown in natural-resources-related building.”

The declines put the bottom for the construction industry further away. Many are forecasting residential construction to hit its nadir some time this year. However, as the nonresidential sector took longer to turn down, it could put an ultimate bottom that much further in the future.

“We expect residential construction to bottom in the second quarter of 2009,” said Anika R. Khan of Wachovia Economics Group. But, “nonresidential should continue to post declines well into 2010.”

“The scope for further declines is huge, given the boom of recent years.” Shepherdson said.

http://blogs.wsj.com/economics/2009/03/02/construction-woes-spread-beyond-housing/