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Construction Spending Hits 4-Year High

Friday, October 25, 2013

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U.S. construction spending in August reached levels not seen in more than four years, driven by a booming residential sector, according to new federal data.

However, construction industry officials warned that the data do not address any potential impact from the recent government shutdown, which led many companies to press the pause button on projects.

contractor
Associated General Contractors of America

Residential construction spending rose 1.2 percent in August from July's revised level. The segment is up 18.7 percent from a year ago, according to the Commerce Department.

Total construction spending reached $915.1 billion in August, a 0.6 percent uptick above the July revised level and a 7.1 percent increase from August 2012 levels, the  U.S. Commerce Department’s Census Bureau reported Tuesday (Oct. 22).

The increase was the fifth consecutive monthly gain, and spending hit its highest level since April 2009.

During the first eight months of this year, construction spending amounted to $581.9 billion, 5.9 percent above the same period in 2012

The 16-day federal government shutdown delayed the release of the data, originally scheduled for Oct. 1.

Private Construction Mixed

Spending on private construction edged up 0.7 percent in August from July’s revised level, to a seasonally adjusted annual rate of $640.5 billion, as residential construction spending rose 1.2 percent and nonresidential construction essentially held steady, up slightly at 0.1 percent.

Total private construction spending was 11.5 percent above August 2012 figures.

Residential Segment Surges

The residential segment was at a seasonally adjusted rate of $340.2 billion, fueled by single-family home and apartment construction spending. The booming segment was up 18.7 percent from a year ago.

Spending for new single-family homes was at $171.7 billion in August, a 28.2 percent increase from August 2012.

Spending for new multi-family construction reached $32.2 billion, a 37.5 increase from the same month a year ago.

Nonresidential private construction was at a seasonally adjusted rate of $300.3 billion in August, 0.1 percent increase above July's revised estimate.

The numbers for each area of construction were mixed, with commercial spending falling 0.8 percent from July’s revised levels and amusement and recreation increasing 5.4 percent from July’s level.

Public Construction Continues Decline

Public construction spending in August rose 0.4 percent from July, with educational construction spending dropping 1.3 percent and highway construction rising 0.1 percent.

highway construction
Federal Highway Administration

Public construction spending was $274.5 billion for August, down 1.8 percent from August 2012 levels. Highway construction spending rose 0.1 percent from July's revised level, but dipped 1.0 percent compared to last August.

Total public construction spending was $274.5 billion for August, which was down 1.8 percent from August 2012 levels.

Unemployment Rate Falls

Meanwhile, the Labor Department reported that construction employment rose by 20,000 in September and the industry’s unemployment rate fell to a six-year low of 8.5 percent, according to the Associated General Contractors of America.

The AGC says the industry’s unemployment rate dropped to the lowest September rate since 2007.

“The steep decline in the number of unemployed former construction workers suggests companies may have trouble finding experienced workers if the volume of projects continues to expand, as it did in August,” the group said.

Effects of Shutdown Loom

Association officials warned that the industry’s recovery would likely be affected by the federal government shutdown.

They urged federal officials to support water resources legislation currently being debated in Congress.

“Making long-delayed repairs to our aging ports and waterways will give the construction industry a needed boost and support broader economic growth,” said Stephen E. Sandherr, the association’s CEO.

   

Tagged categories: Associated General Contractors; Business matters; Commercial Construction; Construction; Economy; Good Technical Practice; Government; Market forecasts; Residential Construction; Residential contractors

Comment from Deb Huizenga, (10/25/2013, 9:28 AM)

Is the increase in construction due to the rebuilding of the New Jersey coast from the devastation of Superstorm Sandy and other recent mega storms?


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