The U.S. Census Bureau reported that total construction spending slipped 0.1% in January following a 1.4% rise in December. However, it should be noted that November and December spending numbers were revised up $23 billion. As a result, 2011 construction spending fell 1.7% instead of the previously reported drop of 2.0%. January total construction spending was $827.0 billion at a seasonally adjusted annual rate (SAAR). January not seasonally adjusted (NSA) construction spending was up 8.0% from January 2011.
Nonresidential building construction spending dropped in January to $285.5 billion (SAAR), a decrease of 1.5%, following an increase of 1.2% in December. However, on a year-over-year basis NSA spending was up 9.2% in January.
Heavy engineering (non-building) construction spending fell a modest 0.2% to $280.9 billion (SAAR), following five consecutive monthly increase. On a year-over-year basis, spending was up 8.5% NSA in January.
Total residential construction spending, which includes improvements, was up 1.6% after rising 1.4% in December. New residential construction spending, which excludes improvements, rose 2.0% following a 1.6% increase in December. Total residential construction spending was up 6.0% in January 2012 from January 2011, while new residential construction was up 5.0%.
Total public construction spending fell 0.2% in January after increasing 0.7% in December. On a year-over-year basis, spending was down 0.2%. The outlook for public spending is for further declines as local governments struggle to balance their budgets and as Congress strives to reduce the federal government’s deficit. Some hope comes from the states, most of which are seeing their revenues improve faster than expected. Meanwhile, total private construction spending was unchanged in January after rising 1.8% in December. From January 2011 to January 2012, private construction spending increased 12.5%.
U.S. Total Construction Spending | ||||||
| Current Monthly | 3-Month Moving Average | |||||
| Nov-11 | Dec-11 | Jan-12 | Nov-11 | Dec-11 | Jan-12 | |
| New Single-family | 108.8 | 111.2 | 113.9 | 107.7 | 109.1 | 111.3 |
| Month-over-Month % Change | 1.3% | 2.2% | 2.5% | 0.7% | 1.3% | 2.0% |
| Year-over-year % Change (NSA) | 2.4% | 3.9% | 5.7% | |||
| New Multifamily (1) | 22.9 | 22.6 | 22.5 | 22.6 | 22.5 | 22.7 |
| 3.5% | -1.4% | -0.4% | -0.5% | -0.2% | 0.5% | |
| -5.9% | 0.9% | 1.9% | ||||
| New Residential (2) | 131.7 | 133.8 | 136.4 | 130.3 | 131.7 | 134.0 |
| 1.7% | 1.6% | 2.0% | 0.5% | 1.1% | 1.7% | |
| 0.9% | 3.4% | 5.0% | ||||
| Residential Improvements (3) | 121.3 | 122.7 | 124.2 | 117.2 | 120.7 | 122.7 |
| 2.6% | 1.1% | 1.3% | 3.8% | 3.0% | 1.7% | |
| 6.4% | 12.2% | 7.2% | ||||
| Total Residential (4) (5) | 253.0 | 256.4 | 260.6 | 247.5 | 252.4 | 256.7 |
| 2.1% | 1.4% | 1.6% | 2.0% | 2.0% | 1.7% | |
| 3.4% | 7.3% | 6.0% | ||||
| Nonresidential Building | 286.3 | 289.8 | 285.5 | 285.0 | 285.9 | 287.2 |
| 1.8% | 1.2% | -1.5% | 0.1% | 0.3% | 0.5% | |
| 5.0% | 8.0% | 9.2% | ||||
| Heavy Engineering (Non-Building) | 276.7 | 281.4 | 280.9 | 272.9 | 276.7 | 279.7 |
| 1.7% | 1.7% | -0.2% | 1.3% | 1.4% | 1.1% | |
| -0.9% | 1.7% | 8.5% | ||||
| Total (5) | 816.0 | 827.6 | 827.0 | 805.4 | 815.0 | 823.6 |
| 1.9% | 1.4% | -0.1% | 1.1% | 1.2% | 1.1% | |
| 2.4% | 5.5% | 8.0% | ||||
Monthly levels are seasonally adjusted at annual rates (SAAR figures). | ||||||
Positive economic reports continue to accumulate. Fourth quarter real (inflation adjusted) gross domestic product (GDP) was revised up from 2.8% (SAAR) to 3.0%, its fastest quarterly rate of growth since second quarter 2010. Nonfarm payroll employment increased 227,000 in February (SAAR), the third consecutive increase in excess of 200,000. The unemployment rate held steady at 8.3% compared to 9.0% in February 2011.
Europe continues to muddle through its problems. Although we expect Europe to work through its immediate problems as they crop up, their failure to provide any solid long-term solutions means that developments in Europe remain a major risk to the U.S. economy.
The price of oil is another major risk to U.S. economic growth. A prolonged, large increase in oil prices, roughly $30 to $50 a barrel above current prices, would damage the U.S. and world economies. The current high price of oil is a drag on growth, but not sufficient to send the U.S. into recession.
Assuming no recession, the Reed Construction Data forecast is for total construction spending to increase 7.0% in 2012 and 6.0% in 2013.
U.S. Total Construction Spending | ||||||
| Actual | Forecast | |||||
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | |
| New Single-family | 185.8 | 105.3 | 112.6 | 106.8 | 116.9 | 125.3 |
| Year-over-year % Change | -39.1% | -43.3% | 6.9% | -5.2% | 9.5% | 7.1% |
| New Multifamily (1) | 51.2 | 35.9 | 23.7 | 22.1 | 23.7 | 26.7 |
| -8.1% | -30.0% | -34.0% | -6.6% | 7.2% | 12.5% | |
| New Residential (2) | 237.0 | 141.2 | 136.2 | 128.9 | 140.6 | 151.9 |
| -34.3% | -40.4% | -3.5% | -5.4% | 9.1% | 8.0% | |
| Residential Improvements (3) | 120.7 | 112.7 | 112.5 | 116.8 | 123.3 | 129.1 |
| -13.5% | -6.6% | -0.2% | 3.8% | 5.6% | 4.7% | |
| Total Residential (4) (5) | 357.7 | 253.9 | 248.7 | 245.6 | 263.9 | 281.1 |
| -28.5% | -29.0% | -2.1% | -1.2% | 7.4% | 6.5% | |
| Nonresidential Building | 437.7 | 375.7 | 288.9 | 278.1 | 294.4 | 318.7 |
| 8.4% | -14.2% | -23.1% | -3.7% | 5.8% | 8.3% | |
| Heavy Engineering (Non-Builidng) | 272.1 | 273.5 | 266.0 | 266.0 | 286.6 | 296.1 |
| 9.7% | 0.5% | -2.8% | 0.0% | 7.7% | 3.3% | |
| Total (5) | 1,067.6 | 903.2 | 803.6 | 789.8 | 844.9 | 895.9 |
| -7.4% | -15.4% | -11.0% | -1.7% | 7.0% | 6.0% | |
(1) New Multifamily = New Private Multifamily + New Public Multifamily - Public Improvements | ||||||
Read more forecasts from Reed Construction Data:
Nonresidential Building Construction Falls in January
Heavy Engineering (Non-Building) Construction Spending Slips in January
New Residential Construction Spending Continues to Improve
