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Construction Spending Rises 4.8% Nationwide in 2013

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Total construction spending edged up 0.1% in December and rose by a modest 4.8% for all of 2013, as a robust market for apartments and single-family houses outweighed downturns in private nonresidential and public projects, according to a recent analysis of new Census Bureau data by the Associated General Contractors of America.

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“Residential construction ended on a strong note in 2013 and should remain positive for at least the next several months,” said Ken Simonson, the association's chief economist. “Meanwhile, private nonresidential spending appears to be poised for a rebound, but the short-term outlook for public construction is still negative.”

Construction put-in-place totaled $930 billion in December, 0.9% higher than the November total, which was revised down $5 billion from the initial estimate. For 2013 as a whole, spending was 4.8% above the 2012 level, a slowing from the 9% gain that year.

Private residential construction spending increased by 2.6% in December and jumped 18% for all of 2013. Private nonresidential spending dipped 0.7% for the month and 0.4% for the full year. Public construction spending dropped 2.3% for the month and 2.8% for the year.

“The ongoing surge of oil-and gas-related activity should boost several types of private nonresidential construction in 2014,” Simonson commented. “Many regions will experience more work on pipelines, railroads, manufacturing plants and even fueling facilities for trucks and buses that convert to natural gas. In addition, communities in the drilling areas will get more housing, hotels and retail projects. As a result, private nonresidential spending should grow at a 6-10% rate in 2014 overall,” he said.

Simonson added that he expects less rapid expansion of private residential construction, especially single family, but that overall residential spending should still increase by around 10%. However, he said public construction spending will be level with the 2013 total, if not slightly lower.

Highway and street construction, the largest public category, climbed 1.8% in December and 1.0% for the full year, association officials said. But they warned the federal law that supports highway and transit projects will expire in September and may run out of funds as soon as August, triggering a sharp decrease in funding. Officials also noted that Congress remains stalled on resolving differences in legislation to authorize much-needed river, harbor and flood-control infrastructure.

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