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 | Jan 23, 2019
Architecture billings slow, but close 2018 with growing demand
AIA’s Architecture Billings Index (ABI) score for December was 50.4 compared to 54.7 in November.
Market Data | Jan 16, 2019
AIA 2019 Consensus Forecast: Nonresidential construction spending to rise 4.4%
The education, public safety, and office sectors will lead the growth areas this year, but AIA's Kermit Baker offers a cautious outlook for 2020.
Market Data | Dec 19, 2018
Brokers look forward to a commercial real estate market that mirrors 2018’s solid results
Respondents to a recent Transwestern poll expect flat to modest growth for rents and investment in offices, MOBs, and industrial buildings.
Market Data | Dec 19, 2018
When it comes to economic clout, New York will far outpace other U.S. metros for decades to come
But San Jose, Calif., is expected to have the best annual growth rate through 2035, according to Oxford Economics’ latest Global Cities report.
Market Data | Dec 19, 2018
Run of positive billings continues at architecture firms
November marked the fourteenth consecutive month of increasing demand for architectural firm services.
Market Data | Dec 5, 2018
ABC predicts construction sector will remain strong in 2019
Job growth, high backlog and healthy infrastructure investment all spell good news for the industry.
Market Data | Dec 4, 2018
Nonresidential spending rises modestly in October
Thirteen out of 16 subsectors are associated with year-over-year increases.
Market Data | Nov 20, 2018
Construction employment rises from October 2017 to October 2018 in 44 states and D.C.
Texas has biggest annual job increase while New Jersey continues losses; Iowa, Florida and California have largest one-month gains as Mississippi and Louisiana trail.
Market Data | Nov 15, 2018
Architecture firm billings continue to slow, but remain positive in October
Southern region reports decline in billings for the first time since June 2012.
Market Data | Nov 14, 2018
A new Joint Center report finds aging Americans less prepared to afford housing
The study foresees a significant segment of seniors struggling to buy or rent on their own or with other people.