Construction spending in December exhibited sharply varied trends, with downturns from a year earlier in every private category, mixed results for public construction, and double-digit increases in residential construction, according to an analysis of new federal construction spending data by the Associated General Contractors of America. Association officials said the new figures demonstrate how the pandemic is boosting demand for new housing while undermining demand for most other types of construction projects.
“Private nonresidential construction has declined for six months in a row, and the slide is accelerating,” said Ken Simonson, the association’s chief economist. “While some categories of public construction have held up so far, state and local budget problems are likely to drive a downturn in public project starts in the next few months.”
Construction spending in December totaled $1.49 trillion at a seasonally adjusted annual rate, an increase of 1.0% from the pace in November and 5.7% higher than in December 2019. But the gains were limited to residential construction, which soared 3.1% for the month and 20.7% year-over-year. Meanwhile, private and public nonresidential spending fell 0.8% from November and 4.8% from a year earlier¬.
Private nonresidential construction spending slumped 1.7% from November to December and 9.8 from December 2019. All 11 private nonresidential categories in the government report declined from a year earlier.
The largest private nonresidential segment, power construction, fell 10.8% year-over-year despite a gain of 0.6% from November to December. Among the other large private nonresidential project types, commercial construction—comprising retail, warehouse and farm structures—slipped 1.4% year-over-year and 2.8% for the month. Manufacturing construction tumbled 17.6% from a year earlier and 5.6% for the month. Office construction declined 3.3% year-over-year despite edging up 0.2% in December. Healthcare construction fell 8.7% from the year before and 3.0% since November.
Public construction spending increased 3.0% year-over-year and 0.5% for the month. Results were mixed among the largest segments. Highway and street construction rose 3.9% from a year earlier and 0.9% for the month. Educational construction increased 4.5% year-over-year and 0.6% in December. But spending on transportation facilities declined 1.0% for the year despite a gain of 0.9% in December.
Private residential construction spending increased for the seventh-straight month, jumping 20.7 year-over-year and 3.1% in December. Single-family homebuilding leaped 23.8% compared to December 2019 and 5.8% for the month. Multifamily construction spending climbed 17.8% for the year and inched up 0.1% for the month.
Association officials said commercial construction was likely to suffer amid weakening demand unless Congress and the Biden administration enact new recovery measures, including backfilling local construction budgets and passing new infrastructure funding. They said the new federal investments were needed to sustain construction employment levels in many parts of the country until private sector demand recovers.
“Even as they work out details on the latest coronavirus relief plan, Congress and the Biden administration need to start work on measures to rebuild the economy and recover lost jobs,” said Stephen E. Sandherr, the association’s chief executive officer. “One of the most effective ways to help the newly unemployed will be to rebuild aging infrastructure and maintain state and local construction budgets.”
Related Stories
Market Data | Nov 12, 2018
Leading hotel markets in the U.S. construction pipeline
Projects already under construction and those scheduled to start construction in the next 12 months, combined, have a total of 3,782 projects/213,798 rooms and are at cyclical highs.
Market Data | Nov 6, 2018
Unflagging national office market enjoys economic tailwinds
Stable vacancy helped push asking rents 4% higher in third quarter.
Market Data | Nov 2, 2018
Nonresidential spending retains momentum in September, up 8.9% year over year
Total nonresidential spending stood at $767.1 billion on a seasonally adjusted, annualized rate in September.
Market Data | Oct 30, 2018
Construction projects planned and ongoing by world’s megacities valued at $4.2trn
The report states that Dubai tops the list with total project values amounting to US$374.2bn.
Market Data | Oct 26, 2018
Nonresidential fixed investment returns to earth in Q3
Despite the broader economic growth, fixed investment inched 0.3% lower in the third quarter.
Market Data | Oct 24, 2018
Architecture firm billings slow but remain positive in September
Billings growth slows but is stable across sectors.
Market Data | Oct 19, 2018
New York’s five-year construction spending boom could be slowing over the next two years
Nonresidential building could still add more than 90 million sf through 2020.
Market Data | Oct 8, 2018
Global construction set to rise to US$12.9 trillion by 2022, driven by Asia Pacific, Africa and the Middle East
The pace of global construction growth is set to improve slightly to 3.7% between 2019 and 2020.
Market Data | Sep 25, 2018
Contractors remain upbeat in Q2, according to ABC’s latest Construction Confidence Index
More than three in four construction firms expect that sales will continue to rise over the next six months, while three in five expect higher profit margins.
Market Data | Sep 24, 2018
Hotel construction pipeline reaches record highs
There are 5,988 projects/1,133,017 rooms currently under construction worldwide.