Construction spending increased in December compared to both November and a year ago thanks to growing demand for residential construction, according to an analysis of federal spending data the Associated General Contractors of America released today. Association officials noted, however, that spending on private nonresidential construction was flat for the month and down compared to a year ago while public sector construction spending fell for both the month and the year.
“Demand for new housing remains strong, while demand for nonresidential projects has been variable and most types of public sector investments in construction are declining,” said Ken Simonson, the association’s chief economist. “Contractors coping with rising materials prices and labor shortages are also dealing with the consequences of a nonresidential market that is, at best, uneven.”
Construction spending in December totaled $1.64 trillion at a seasonally adjusted annual rate, 0.2% above the November rate and 9.0% higher than in December 2020. Full-year spending for 2021 increased 8.2% compared to 2020.
Private residential construction spending rose 0.7% in December from a month prior and 12.7% from December 2020. For 2021 as a whole, residential construction spending jumped 23.2% from 2020, with gains of 32.8% for single-family spending and 15.6% for multifamily spending.
Private nonresidential construction spending was nearly unchanged from November to December but increased 9.1% from December 2020. For all of 2021, private nonresidential spending slipped 2.3% from 2020. The largest private nonresidential segment, power construction, rose 0.1% for the month and 4.9% year-over-year. Among other large segments, commercial construction--comprising warehouse, retail, and farm structures--inched up 0.1% in December and jumped 18.4% year-over-year, driven by surging demand for distribution facilities. Manufacturing construction spending fell by 1.9% in December, after 11 consecutive months of growth, but posted a 30.4% gain above its year-earlier level.
Public construction declined 1.6% in December, with decreases in 11 of the 12 categories, and 2.9% year-over-year. For 2021 as a whole, public construction fell 4.2% from 2020. Highway and street construction increased 0.1% from November and rose 0.9% compared to December 2020. Educational construction slipped 1.4% for the month and skidded 8.5% year-over-year. Transportation construction spending fell 3.0% in December and 6.3% year-over year.
Association officials said one reason for the declines in public sector construction spending is that Congress has yet to appropriate most of the additional funds authorized in the Bipartisan Infrastructure Bill signed by President Biden last year. They urged Congress to quickly make those new funds available so state and local officials can make the investments needed to improve the nation’s aging infrastructure.
“The Bipartisan Infrastructure Package’s immediate promise is not being met because Congress has yet to appropriate much of the increased funding,” said Stephen E. Sandherr, the association’s chief executive officer. “It is time to improve our infrastructure and protect those who rely on it.”
Related Stories
Market Data | Nov 25, 2019
Office construction lifts U.S. asking rental rate, but slowing absorption in Q3 raises concerns
12-month net absorption decelerates by one-third from 2018 total.
Market Data | Nov 22, 2019
Architecture Billings Index rebounds after two down months
The Architecture Billings Index (ABI) score in October is 52.0.
Market Data | Nov 14, 2019
Construction input prices unchanged in October
Nonresidential construction input prices fell 0.1% for the month and are down 2.0% compared to the same time last year.
Multifamily Housing | Nov 7, 2019
Multifamily construction market remains strong heading into 2020
Fewer than one in 10 AEC firms doing multifamily work reported a decrease in proposal activity in Q3 2019, according to a PSMJ report.
Market Data | Nov 5, 2019
Construction and real estate industry deals in September 2019 total $21.7bn globally
In terms of number of deals, the sector saw a drop of 4.4% over the last 12-month average.
Market Data | Nov 4, 2019
Nonresidential construction spending rebounds slightly in September
Private nonresidential spending fell 0.3% on a monthly basis and is down 5.7% compared to the same time last year.
Market Data | Nov 1, 2019
GDP growth expands despite reduction in nonresident investment
The annual rate for nonresidential fixed investment in structures declined 15.3% in the third quarter.
Market Data | Oct 24, 2019
Architecture Billings Index downturn moderates as challenging conditions continue
The Architecture Billings Index (ABI) score in September is 49.7.
Market Data | Oct 23, 2019
ABC’s Construction Backlog Indicator rebounds in August
The primary issue for most contractors is not a lack of demand, but an ongoing and worsening shortage of skilled workers available to meet contractual requirements.
Multifamily Housing | Oct 16, 2019
A new study wonders how many retiring adults will be able to afford housing
Harvard’s Joint Center for Housing Studies focuses on growing income disparities among people 50 or older.