Construction spending totaled $807 billion in November 2011, the highest level since June 2010, as homebuilding, private nonresidential construction and public construction all increased compared to October, the Associated General Contractors of America reported following an analysis of new Census Bureau data. Association officials cautioned, however, that public spending on construction will drop during 2012 because of delays in enacting needed infrastructure bills and planned cuts to many federal construction programs.
“Several segments of construction appear to be climbing out of a hole,” said the association’s chief economist, Ken Simonson. “The new year should reinforce recent year-over-year gains in apartment, power, manufacturing, and private transportation construction. But November’s upturns in single-family homebuilding and public construction may not be sustainable.”
Simonson noted that total construction spending rose 1.2% in November from October and 0.5% from the November 2010 level. Private residential construction posted increases of 2.0% and 3.4%, with gains in single-family, multifamily and residential improvements.
Private nonresidential construction spending inched up a negligible amount from October but gained 4.5% compared to November 2010. Public construction spending rose 1.7% in November but declined 5.3% from a year earlier.
The construction economist added that the uptick in private nonresidential construction from November 2010 was widespread, led by manufacturing up 12.6%; commercial (retail, warehouse and farm) up 12.0%; private educational up 10.0%; private transportation up 9.2%; and power (including oil and gas) up 8.4%.
Most public construction categories shrank over the past 12 months, although the two largest had mixed results, Simonson observed. Highway spending increased for the sixth straight month by 1.9%, but was 2.2% below the November 2010 mark. Public educational construction was up 0.5% for the month and 2.8% year-over-year.
Associated General Contractors of America leaders said planned cuts to a range of federal building and infrastructure construction programs were likely to hurt the construction industry even as private sector demand finally rebounds. They noted that the federal budget for 2012 includes a more than 6% cut for construction programs and added that Congress is years late in passing much-needed water, aviation, and surface transportation legislation.