Construction Spending Up 1.8% in January From Year-Earlier Level
Construction spending climbed 1.8% in January on a year-over-year basis, to an annual rate of $971.4 billion, but it was down 1.1% from December's total, the Commerce Dept. has reported.
The latest monthly report on the value of finished construction projects, which Commerce's U.S. Census Bureau released on March 2, also showed that January’s private construction rose 0.5% from its year-earlier level, to a $697.6-billion annual rate, but slipped 0.5% from December’s level.
Public-sector construction put in place in January climbed 5.1% from January 2014’s level, to a $273.8-billion rate, but declined 2.6% from December.
The rates are adjusted for seasonal variations.
The largest segment, private residential construction, totaled $357.2 billion in January, a 3.2% dip from the year-earlier rate but a 0.6% gain from December’s figure.
Other key private-construction segments posting year-over-year increases included commercial buildings, up 14% to $59.1billion, and office buildings, up 13.7% to $46.8 billion. Both sectors were down from their December levels, however.
Major private segments that declined from January 2014 rates included power, down 13.2% to $93.6 billion, and educational construction, which edged down 0.4%, to $74.3 billion. Both segments also recorded decreases from December.
In public construction, highways and streets—the category’s largest segment—rose 8.4% year over year, to a rate of $88.3 billion, and also increased a modest 0.6% compared with December’s level. Education, the No. 2 public-construction segment, was up 0.6% from its year-earlier rate, hitting $58.9 billion, but dipped 3.4% from December.
Registering significant declines from January 2014 were public safety, down 15.7% to $8.1 billion, and power, which fell 11.4% to $10.8 billion.
Anirban Basu, chief economist for the Associated Builders and Contractors, which focuses on non-residential construction, noted that that sector increased 4.8% in January, year over year, but was down 2% from December. Basu cautioned, "Interpreting January construction statistics is always tricky because the season adjustments can never precisely reflect the impact of any given winter or weather system."
Basu said that snowstorms that hit New England and other areas in January may explain the dip in non-residential volume. He also said the slowdown at West Coast ports may have hampered construction-materials shipments and also projects' progress.
Ken Simonson, Associated General Contractors chief economist, said, "Construction continues to expand overall but with a lot of variability by month and segment."
Simonson said the overall numbers were pulled down by what he termed an "unreliable estimate" by the Census Bureau showing a sharp drop in the value of residential improvements. He says that falloff is "not credible," because home sales and home-improvement retailers' revenue both are up.
Simonson traces the problem to the Census Bureau's having to drop its own survey of the segment due to budget cuts and rely instead on "very indirect sources" to track improvement work.