Construction spending edged up only slightly in December from the previous month, at 0.4%, but total spending on projects for the year rose to its highest level since 2007.

The U.S. Census Bureau reported that nonresidential spending totaled $681.2 billion in 2015, but declines in several key categories could be a cause for concern. In its most recent report, the Census Bureau also revised the November spending total down by 0.6% to $683.7 billion.  

In December, 12 of 16 nonresidential subsectors saw spending decreases from the previous month. Private nonresidential spending slipped 2.1% while public-sector spending rose 2.2%, the report said.

Still, the mostly flat performance of the past two months has elicited concern among some industry economists.

“December’s estimate is a bit unnerving, not only because it represents a second consecutive month of spending declines, but also because unusually warm temperatures should have helped to translate into better spending performance,” says Anirban Basu, chief economist for the Associated Builders and Contractors.

“This is not to suggest that the nonresidential recovery will end in the near term,” Basu adds. “Most firms continue to report healthy backlogs, and hiring remains aggressive, implying that many firms are staffing up in order to perform on forthcoming contractual opportunities.”

But the December spending rate was only 0.2% higher than in July, indicating that construction may have leveled off in the second half of 2015, says Ken Simonson, chief economist for the Associated General Contractors of America.

“Home and apartment construction continued growing strongly while public construction, particularly for highways, also advanced,” says Simonson. “But spending on most private nonresidential categories has stalled or turned negative in the past several months. Contractors still say they are very busy now, but uncertainty over the economy may mean new projects dry up.”

Yearl-Over-Year Increase

Construction spending in December totaled $1.117 trillion at a seasonally adjusted annual rate, 8.2% higher than in December 2014. For 2015 as a whole, spending totaled $1.097 trillion, an increase of 10.5% from 2014.

Much of the boost came from the homebuilding sector. Private residential spending increased 0.9% for the month and 8.1% compared to December 2014. Spending on multifamily residential construction jumped 2.7% for the month and 12% higher year-over-year, while single-family spending rose 1.0% and 8.7%, respectively.

Economists cautioned that slowdowns in a number of key nonresidential categories could reflect broader financial uncertainty.

Simonson says that the total slumped to the lowest rate since April 2015 although full-year spending exceeded 2014 totals for every category except power and energy construction.

Only four of 16 nonresidential construction sectors experienced spending increases in December on a monthly basis:

  • Spending in the highway and street category expanded by 9.6% on a monthly basis and 11.7% on a yearly basis.
  • Communication-related spending increased 4% month over month and 37.2% year over year.
  • Sewage and waste disposal-related spending expanded 1.3% for the month but fell 9.7% from the same time last year.
  • Spending in the amusement and recreation category climbed 0.5% on a monthly basis and 9.2% on a year-over-year basis.

Spending in 12 of the nonresidential construction subsectors fell in December on a monthly basis:


  • Spending in the power category fell 0.3% from November 2015 but is 7.6% higher than in December 2014.
  • Commercial-related construction spending fell 0.6% for the month and 3.2% for the year.
  • Education-related construction spending fell 0.8% on a monthly basis but expanded 10% on a yearly basis.
  • Transportation-related spending fell 0.8% month over month but expanded 2.3% year over year.
  • Lodging-related spending was down 1.3% for the month but is up 29.1% on a year-ago basis.
  • Spending in the office category fell 1.8% from November 2015 but is up 16.6% from December 2014.
  • Water supply-related spending fell 2.9% on a monthly basis and 6.6% on a yearly basis.
  • Health care-related spending fell 3.2% month over month, but is up 0.4% year over year.
  • Spending in the religious category fell 4.1% for the month and 1.7% for the year.
  • Public safety-related spending declined 4.6% for the month and 7.4% for the year.
  • Manufacturing-related spending fell 7.2% from November 2015 but is 19.6% higher than in December 2014.
  • Conservation and development-related spending declined 9.9% on a monthly basis and is 8% lower on a yearly basis.