U.S. Construction Spending Dips in December
The seasonally adjusted annual rate of construction spending for December 2016 was estimated at $1,181.5 billion, according to the latest report from the U.S. Census Bureau. This is 0.2% below November’s estimate which was revised up from up from $1,182.1 billion to $1,184.4 billion. October’s annual rate was revised back up from $1,171.4 billion to $1,173.7 billion.
Despite the dip in December, the total construction value is the highest since 2006 when it totaled $1,161.3 billion. Total construction put in place for 2016 was valued at $1,1162.4 billion. This is a 4.5% increase over the $1,112.4 billion spent in 2015, right in line with the 4.4% growth predicted by ConstructConnect’s Chief Economist Alex Carrick. Total nonresidential construction for 2016 totaled $699.7 billion and total residential was valued at $462.6 billion.
Private construction spending in December was up 0.2% over November's figure at an estimated rate of $897.0 billion. November’s seasonally adjusted annual rate was revised up from $892.8 billion to $894.8 billion. October’s estimate was revised back up from $884.3 billion to $886.2 billion.
Total private construction put in place for 2016 was $876.3 billion, split between nonresidential construction at $433.7 billion and residential construction at $456.2 billion. Total private construction spending in 2016 was 6.4% higher than the $823.5 billion spent in 2015.
Public construction spending for December was at a seasonally adjusted annual rate of $284.5 billion. This is 1.7% below November’s estimate which was revised up from $289.3 billion to $289.6 billion October’s estimate of $287.1 billion was also revised up to $287.6 in the latest release.
Total public construction put in place for 2016 was $286.0 billion, 1.0% lower than the $288.9 billion spent on public construction in 2015.
ConstructConnect’s Chief Economist shared his insights on the latest construction spending report,
“The Census Bureau’s seasonally adjusted put in place construction spending dollars faltered slightly in December. On a month-to-month basis, they were -0.2%, after being +0.9% in November and +0.8% in October. Private sector spending was +0.2% m/m in the latest month, while the public sector was -1.7%.
Most noteworthy, however, has been the pick-up in total construction spending in the latest three months. On a monthly average seasonally adjusted basis, the total dollar volume was +5.7% (annualized) in Q4 versus Q3, with residential surging ahead by +8.5%.
For 2016 as a whole, grand total construction spending was +4.5%, with residential (+5.1%) pulling ahead faster than nonresidential (+4.1%).
The annual average increase in construction spending in the prior four years, 2012 to 2015, was +9.0%, or twice as fast as in 2016. (2011 had been -2.6%.) The Census Bureau’s numbers are in ‘current dollars,’ meaning they aren’t adjusted for inflation. Construction material cost increases have been quiet for more than a year, but with commodity prices on the mend, that may not hold much longer.
The nonresidential type-of-structure categories with particular strength in 2016 were ‘lodging’ (+24.8% y/y) and ‘offices’ (+24.9%). ‘Commercial/retail’ (+10.9%) and ‘amusement and recreation’ (+9.6%) also had good years. ‘Manufacturing,’ where the new administration in Washington is already focusing efforts to raise capital spending, was -4.3%.”