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Construction spending mixed based on latest AGC findings

By |  February 1, 2021
Will Congress commit $1 trillion toward infrastructure? Photo: iStock.com/kozmoat98

According to the Associated General Contractors of America, public construction spending increased 3 percent in 2020 and 0.5 percent in the month of December. Photo: iStock.com/kozmoat98

Construction spending in December exhibited sharply varied trends, with downturns from a year earlier in every private category, mixed results for public construction, and double-digit increases in residential construction, according to an analysis of new federal construction spending data by the Associated General Contractors of America (AGC).

AGC officials say the new figures demonstrate how the pandemic is boosting demand for new housing while undermining demand for most other types of construction projects.

“Private nonresidential construction has declined for six months in a row, and the slide is accelerating,” says Ken Simonson, AGC’s chief economist. “While some categories of public construction have held up so far, state and local budget problems are likely to drive a downturn in public project starts in the next few months.”

December spending

The Associated General Contractors of AmericaConstruction spending in December totaled $1.49 trillion at a seasonally adjusted annual rate, an increase of 1 percent from the pace in November and 5.7 percent higher than in December 2019.

Still, the gains were limited to residential construction, which soared 3.1 percent for the month and 20.7 percent year-over-year. Private and public nonresidential spending, meanwhile, fell 0.8 percent from November and 4.8 percent from a year earlier.

According to AGC, private nonresidential construction spending slumped 1.7 percent from November to December and 9.8 percent from December 2019. All 11 private nonresidential categories in the government report declined from a year earlier, the association adds.

The largest private nonresidential segment – power construction – fell 10.8 percent year-over-year despite a gain of 0.6 percent from November to December.

Among the other large private nonresidential project types, commercial construction –comprising retail, warehouse and farm structures – slipped 1.4 percent year-over-year and 2.8 percent for the month. Manufacturing construction tumbled 17.6 percent from a year earlier and 5.6 percent for the month. Office construction declined 3.3 percent year-over-year despite edging up 0.2 percent in December. Health care construction fell 8.7 percent from the year before and 3 percent since November.

Public construction spending increased 3 percent year-over-year and 0.5 percent for the month, AGC says. Results were mixed among the largest segments. Highway and street construction rose 3.9 percent from a year earlier and 0.9 percent for the month. Educational construction increased 4.5 percent year-over-year and 0.6 percent in December. But spending on transportation facilities declined 1 percent for the year despite a gain of 0.9 percent in December.

Residential

Private residential construction spending increased for the seventh straight month, jumping 20.7 percent year-over-year percent and 3.1 percent in December. Single-family homebuilding jumped 23.8 percent compared to December 2019 and 5.8 percent for the month. Multifamily construction spending climbed 17.8 percent for the year and inched up 0.1 percent for the month.

AGC officials say commercial construction was likely to suffer amid weakening demand unless Congress and the Biden administration enact new recovery measures, including backfilling local construction budgets and passing new infrastructure funding. They say the new federal investments were needed to sustain construction employment levels in many parts of the country until private sector demand recovers.

“Even as they work out details on the latest coronavirus relief plan, Congress and the Biden administration need to start work on measures to rebuild the economy and recover lost jobs,” says Stephen Sandherr, AGC’s CEO. “One of the most effective ways to help the newly unemployed will be to rebuild aging infrastructure and maintain state and local construction budgets.”

Kevin Yanik

About the Author:

Kevin Yanik is the editor-in-chief of Pit & Quarry magazine. Yanik can be reached at 216-706-3724 or kyanik@northcoastmedia.net.

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