According to a report released today by Associated Builders and Contractors (ABC), the private construction industry’s value added as a percentage of the nation’s real gross domestic product (GDP) rose to 4 in 2016, the highest level since 2009. The report also shows annual growth in real construction spending, which rose 3.5% in 2016. Thirty-seven states benefited from the rise in construction activity in their state, while 13 states experienced a reduction in activity.
“Although the relative impact of the value added by private construction on various state economies varies both among states in a particular year and within a state over time, every state benefits from construction activity,” said Bernard M. Markstein, Ph.D., president and chief economist of Markstein Advisors, who conducted the analysis and prepared the report for ABC. “The increase in that activity in a particular year adds to the income and potential growth of each state. A decline in that activity acts as a drag on a state’s economic performance.”
The 3.5% national increase in real construction spending was a slowdown from the 4.9% increase in 2015. Only 18 states had a greater growth in real construction spending in 2016 compared to 2015.
2016 CONSTRUCTION SPENDING: THE TOP FIVE STATES
The fastest growth was in the West and the South. The first state outside of those two regions in the ranking of construction growth rates is Rhode Island with the 16th largest increase (up 4.9%). In 2016, the top five states for the increase in their real value added from construction in order from highest to lowest were:
1. Idaho, up 10.7%
2. Georgia and South Carolina (tie), up 9.4%
4. Florida, up 9.3%
5. Oregon, up 9.1%
Idaho had the highest percentage contribution from construction, even though state real GDP advanced a respectable, but more modest, 1.8%. Georgia slipped from its number-one ranking in 2015, while South Carolina made a significant jump from 17th to second place.
Florida’s ranking of number four is down from second place in 2015 when its real construction spending was 11.1%. Oregon saw a big improvement from 33rd place in 2015.
2016 CONSTRUCTION SPENDING: THE BOTTOM FIVE STATES
All of the bottom five states suffered from the effects of low energy prices.
46. Mississippi, down 2.5%
47. West Virginia, down 7.5%
48. North Dakota, down 10.5%
49. Wyoming, down 11.5%
50. Alaska, down 13.2%
Alaska has struggled over the last few years. Not only did it experience the largest drop in real private construction spending in 2016, but it also experienced the second largest decrease in state GDP in the nation, down 5%. Real private construction spending has been down every year starting in 2011, except for 2015 (up 0.2%).
Although Wyoming improved its 2016 ranking—it had the largest decrease in 2015 at 6.6%—the 11.5% plunge was an acceleration of a bad outcome. North Dakota had the third largest decline in its real private construction spending in 2016 and 2015, down 10.5% and 4.1%, respectively. However, the state’s growth in construction spending ranked in the top 10 from 2008 through 2014.
West Virginia had the fourth largest decline in its real private construction spending in 2016 and 2015, down 7.5% and 3.1%, respectively. Mississippi’s 2016 decrease represents a slowdown in the decline in construction from 2014 and 2015, when private construction activity fell 8.6% and 5.6%, respectively.
Read the full report here.
Related Stories
Market Data | Sep 18, 2018
Altus Group report reveals shifts in trade policy, technology, and financing are disrupting global real estate development industry
International trade uncertainty, widespread construction skills shortage creating perfect storm for escalating project costs; property development leaders split on potential impact of emerging technologies.
Market Data | Sep 17, 2018
ABC’s Construction Backlog Indicator hits a new high in second quarter of 2018
Backlog is up 12.2% from the first quarter and 14% compared to the same time last year.
Market Data | Sep 12, 2018
Construction material prices fall in August
Softwood lumber prices plummeted 9.6% in August yet are up 5% on a yearly basis (down from a 19.5% increase year-over-year in July).
Market Data | Sep 7, 2018
Safety risks in commercial construction industry exacerbated by workforce shortages
The report revealed 88% of contractors expect to feel at least a moderate impact from the workforce shortages in the next three years.
Market Data | Sep 5, 2018
Public nonresidential construction up in July
Private nonresidential spending fell 1% in July, while public nonresidential spending expanded 0.7%.
Market Data | Aug 30, 2018
Construction in ASEAN region to grow by over 6% annually over next five years
Although there are disparities in the pace of growth in construction output among the ASEAN member states, the region’s construction industry as a whole will grow by 6.1% on an annual average basis in the next five years.
Market Data | Aug 22, 2018
July architecture firm billings remain positive despite growth slowing
Architecture firms located in the South remain especially strong.
Market Data | Aug 15, 2018
National asking rents for office space rise again
The rise in rental rates marks the 21st consecutive quarterly increase.
Market Data | Aug 13, 2018
First Half 2018 commercial and multifamily construction starts show mixed performance across top metropolitan areas
Gains reported in five of the top ten markets.
