Construction spending at highest level in 36 months

Construction spending in June rose to a 2 ½-year high as double-digit percentage increases in private residential and nonresidential construction offset an ongoing downturn in public construction, according to an analysis of new federal data released by the Associated General Contractors of America.

Association officials say the disparity between private and public construction is likely to persist, and they are urging policymakers to put more funding into infrastructure projects.

“The June spending gains come on top of upward revisions to May and April totals, reinforcing the notion that private construction is now growing consistently,” says Ken Simonson, the association’s chief economist. “Even more encouraging, the improvement is showing up in a wide range of residential and nonresidential categories.”

Simonson says total construction spending gained 0.4 percent for June and 7.0 percent year-over-year. Private nonresidential spending climbed for the fourth consecutive month and was 14 percent higher than in June 2011. Residential construction increased 1.3 percent for the month and 12 percent year-over-year, with new multifamily construction up 3.4 percent and 49 percent, respectively, and single-family homebuilding up 3.0 percent and 19 percent.

Public construction spending appears to have stabilized in recent months, but the June 2012 total was 3.7 percent less than a year earlier, Simonson says. He says only two of the U.S. Census Bureau’s 13 public categories posted year-over-year increases.

“Private nonresidential and multifamily construction should continue to grow in the second half of 2012 and beyond,” Simonson says. “Single-family homebuilding also should top last year’s figures, although progress may not occur every month. As a result, total construction spending in 2012 will be positive for the year for the first time since 2007, even though public construction will remain in the doldrums.”