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Construction Spending Hits 7-Year High

Thursday, September 3, 2015

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U.S. construction spending in July reached levels not seen in more than seven years, according to new federal data.

Total construction spending reached $1.08 trillion, 0.7 percent above the revised June figure and the highest level since May 2008, the U.S. Commerce Department’s Census Bureau reported Tuesday (Sept. 1).

AGC
Associated General Contractors of America

“Although construction employment and spending are still expanding well overall, the gains are increasingly spotty,” warns Ken Simonson, the Associated General Contractors of America’s chief economist.

The increase is 13.7 percent above the July 2014 estimate of $952.5 billion.

During the first seven months of this year, construction spending amounted to $583.2 billion, 9.3 percent above the same period in 2014.

Private Construction Increases

Spending on private construction increased 1.3 percent in July from June’s revised level, to a seasonally adjusted annual rate of $787.8 billion, as residential construction spending rose 1.1 percent and nonresidential construction jumped 1.5 percent.

Total private construction spending was 16.9 percent above July 2014 figures.

The residential segment was at a seasonally adjusted rate of $380.8 billion in July, fueled by single-family home and apartment construction spending. The segment was up 15.6 percent from a year ago.

FHA
Federal Highway Administration via Flickr

Highway construction was at a seasonally adjusted annual rate of $90.3 billion in July, 0.2 percent dip below the revised June estimate.

Spending for new single-family homes was at $218.5 billion in July, a 15.8 percent increase from July 2014.

Spending for new multi-family construction reached $51.6 billion, a 21.2 percent increase from the same month a year ago.

Nonresidential private construction was at a seasonally adjusted rate of $406.9 billion in July, a 1.5 percent increase above June’s revised number.

The numbers for segment of construction were mostly positive, with manufacturing and religious construction posting the highest increases at 4.7 percent and 5.9 percent, respectively. Commercial construction and lodging fell 1 percent in July from June’s revised estimates.

Public Construction Declines

Public construction spending dipped 1.0 percent from June, with educational construction spending dropping 3 percent (to $66.4 billion) and highway construction decreasing 0.2 percent (to $90.3 billion).

However, total public construction spending was $295.6 billion for July, which was up 6.1 percent from July 2014 levels.

Uncertainty Looms

Despite the positive construction spending signs, experts warn the road ahead could be rocky.

“Although construction employment and spending are still expanding well overall, the gains are increasingly spotty,” according to Ken Simonson, the Associated General Contractors of America’s chief economist.

“Uncertainty over funding for transportation infrastructure, a contraction in oil and gas drilling, and turmoil in international markets have left many local construction markets behind even as others grow strongly.”

   

Tagged categories: Commercial Construction; Construction; Contractors; Department of Commerce; Economy; Residential Construction; Roads/Highways; Trends

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