AGC: Construction spending rose in January 2022

Construction spending increased in January compared to both December 2021 and January last year, with strong gains in private nonresidential and residential construction but mixed results for public spending, according to an analysis of federal spending data done by the Associated General Contractors of America (AGC).

Association leaders urged Washington officials to speed the award of funds promised by the Infrastructure Investment & Jobs Act (IIJA).

“Private nonresidential construction, especially for manufacturing plants, has rebounded sharply in recent months, while demand for housing remains strong,” says Ken Simonson, AGC’s chief economist. “But public projects have yet to grow consistently.”

Construction spending in January totaled $1.68 trillion at a seasonally adjusted annual rate, 1.3 percent above the upwardly revised December rate and 8.2 percent higher than in January 2021.

Private residential construction spending rose 1.3 percent in January from a month prior and 13.4 percent from January 2021. Private nonresidential construction spending increased 1.8 percent from December to January and 7.3 percent from January 2021. In contrast, public construction spending grew 0.6 percent for the month but slipped 1.3 percent from year-ago level.

Among residential segments, single-family construction was up 1.2 percent over December’s total and 15.4 percent over January last year. Multifamily construction dropped less than 0.1 percent in January but rose 4.8 percent from a year earlier. Spending on improvements to existing owner-occupied houses increased 1.8 percent for the month and 13.7 percent year-over-year.

A surge in manufacturing construction, which gained 8.5 percent for the month and 31.2 percent year-over-year, accounted for the bulk of the private nonresidential gain. In addition, the largest private nonresidential segment, power construction, rose 2.7 percent for the month but trailed the January 2021 rate by 1.4 percent. The next-largest segment, commercial construction, declined 0.5 percent in January but jumped 18.0 percent year-over-year. The segment saw year-over-year gains in warehouses (up 22.4 percent), retail categories (up 15.2 percent) and farm (up 4.4 percent).

The largest public segments showed diverse results. Highway and street construction edged down 0.1 percent from December but rose 5.2 percent compared to January 2021. Educational construction was unchanged for the month but fell 9.9 percent year-over-year. Transportation construction spending climbed 1.6 percent in January but grew just 0.1 percent year-over-year.

Association officials say one reason for the uneven public sector construction spending is Congress not appropriating most of the extra funds authorized in the IIJA signed by President Biden last year.

In addition, AGC says the administration has added restrictions not intended by Congress. Officials urge Congress to quickly pass the appropriations bill and the administration to stick to the wording and intent of the infrastructure bill.

“The highway, transportation and other infrastructure promised by that bill is urgently needed to tackle snarled supply chains and rising costs,” says Stephen Sandherr, AGC’s CEO. “Congress and the administration need to fulfill the promise of the legislation right away.”