Construction Spending Soars Year Over Year
Construction spending in September rose slightly from the previous month’s level but posted a much stronger gain from its year-earlier total, the Census Bureau has reported.
The bureau’s latest monthly construction spending report, released on Nov. 2, showed that the volume of finished projects in September hit a $1.094-trillion annual rate, up 0.6% from Augus.
But the total was a sharp 14.1% hike from the September 2014 rate, reported the bureau, which is part of the Commerce Dept.
Private-sector construction put in place in September also edged up 0.6% from August, to a rate of $794.2 billion. But that figure was a 16% jump from September 2014.
Public construction recorded a $300-billion annual rate in September, an 0.7% increase month-to-month and a 9.4% gain year-over year.
The rates are adjusted for seasonal variations.
Construction economists pointed to nonresidential construction, which slipped from August, though just by 0.1%. Private nonresidential was off 0.7% and public nonresidential was up 0.7%.
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Ken Simonson, Associated General Contractors of America’s chief economist, said in a statement, “It appears…that many firms performing private nonresidential work could not find enough qualified workers in September to keep pace with growing demand.”
At the Associated Builders and Contractors, which concentrates on nonresidential construction, Chief Economist Anirban Basu agreed that a lack of workers may be a factor in that sector’s September decline.
In a statement, Basu also suggested, “With construction materials prices falling, contractors may be able to offer somewhat lower prices for their services, helping to suppress growth in construction value put in place.”
Sixteen of the 18 industry segments posted double-digit, year-over-year increases in September.
They included such major categories as office buildings, which rose 19.3% to $57.5 billion; educational facilities, up 11.5% to $87.6 billion; and highway and street projects, which gained 10%, to $91.6 billion.
On the negative side, commercial building was down 2% to $65.8 billion.
Nine of the 17 segments posted month-to-month increases, including religious buildings, up 5.6%, and water supply, up 4.3%.
Eight segments declined from August levels. The largest downturns were in conservation and development, down 6%, and public safety, off 3%.
Links:
Census Bureau release with data table
Associated General Contractors of America Chief Economist Ken Simonson's comments and analysis
Associated Builders and Contractors Chief Economist Anirban Basu's comments and analysis
