Construction Spending Hits Four-Year High in July

(September 3, 2013) – Total construction spending hit a four-year high in July as private residential and nonresidential activity increased while public spending declined, according to an analysis of new Census Bureau data by the Associated General Contractors of America. Association officials urged lawmakers in Washington to make infrastructure investment a top federal priority before funding runs out at the end of September.

“The patterns seen earlier this year reappeared in July, with strong year-over-year gains in single- and multifamily building, a range of results for private nonresidential categories, and deepening downturns in most public segments,” said Ken Simonson, the association’s chief economist. “These trends are likely to hold for the remainder of 2013.”

Construction put in place in July, $901 billion, was the highest mark since June 2009, and an increase of 0.6 percent from the month before and 5.2 percent from July 2012. Totals for May and June were revised up, implying a stronger second quarter for the overall economy than the government reported last week.

Private residential spending rose 0.6 percent for the month and 17 percent from July 2012. New single-family construction climbed 0.5 percent in July and 29 percent from a year ago. New multifamily spending edged up 0.1 percent in July and advanced 39 percent year-over-year.

Private nonresidential spending gained 1.3 percent in July and 2.0 percent year-over-year, Simonson observed. Components with substantial increases since July 2012 included lodging, up 33 percent; warehouses, up 11 percent; and the largest private nonresidential category, power—including oil and gas as well as electricity—up 5 percent. However, there were decreases in private health care construction, down 3 percent; and communication, down 12 percent, Simonson noted.

Public construction spending slipped 0.3 percent for the month and 3.7 percent over 12 months. The two largest public components both dropped: highway and street, down 1.1 percent in July and down 3.8 percent year-over-year; and educational, down 1.5 percent and 12 percent, respectively, Simonson said.

“Recent reports suggest the full year will continue to bring mixed news for construction,” Simonson said. “Multifamily construction will keep expanding and single-family homebuilding should do well in most regions. Private nonresidential spending will be very uneven and public construction spending remains threatened.”

Association officials urged policy makers in Washington to enact federal spending bills by September 30 in order to avoid costly interruptions to federally funded construction projects. They said even a short lapse in appropriations could be very disruptive to construction schedules for infrastructure and building projects.

“Congress and the administration shouldn’t play chicken with vitally needed infrastructure,” said Stephen E. Sandherr, the association’s chief executive officer. “Shutting down a project, even for a day, can be very damaging to finishing it on time and keeping key workers on board.”