Construction spending in January posts biggest year-over-year increase since 2006
Total construction spending in January posted the steepest year-over-year increase since 2006, with growth in public construction as well as private residential and nonresidential spending, according to an analysis of new Census Bureau data by the Arlington-based Associated General Contractors of America (AGC).
“Overall construction spending increased in January compared with both December and January 2013 despite uncommonly adverse weather conditions,” Ken Simonson, the association's chief economist, said in a statement. “The monthly gains were limited to homebuilding and multifamily residential construction, although private nonresidential work should rebound in the next few months. Public construction is up for now on a year-over-year basis, but funding remains questionable.”
Construction put in place totaled $943 billion in January, 9.3 percent higher than in January 2013, the fastest rate of growth for total construction spending since May 2006.
Private residential construction spending increased by 1.1 percent in January and jumped 15 percent in 12 months. Private nonresidential spending slipped 0.2 percent for the month, but rose 9.7 percent compared to January 2013. Public construction spending dropped 0.8 percent for the month but increased 2.5 percent from a year earlier.
“Contractors are clearly more optimistic about the outlook for private nonresidential markets this year … “ Simonson said. .“In addition, apartment construction is still very strong in much of the country, and homebuilding should remain positive.”
Simonson added that the Census Bureau estimates for January and December may not accurately reflect the impact of severe winter weather because the agency relies in part on models as well as field reports.
Association officials cited highway and street construction as an example of a category that may be revised. The preliminary data show spending soared 3.7 percent in January and 15 percent year-over-year. But they cautioned that federal highway funding could decline abruptly as early as this summer if the federal highway trust fund runs out of money as predicted.
“Letting highway investments lapse will only hurt overall economic growth and put more construction jobs at risk,” said Stephen E. Sandherr, the association’s CEO.