Construction Hits 17-Month High in November

A recent report by the Department of Commerce says construction spending totaled $807 billion in Nov. 2011, the highest level since June 2010, as homebuilding, private nonresidential construction and public construction all increased compared to October.

However, the Associated General Contractors of America, Washington, D.C., expects public spending to drop even further in 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 percent in November from October and 0.5 percent from the November 2010 level. Private residential construction posted increases of two percent and 3.4 percent (month-to-month and year-to-year, respectively), with gains in single-family, multi-family and residential improvements. Private nonresidential construction spending inched up a negligible amount from October but gained 4.5 percent compared to Nov. 2010. Public spending rose 1.7 percent last month but declined 5.3 percent from a year earlier.

The construction economist added that the uptick in private nonresidential construction from Nov. 2010 was widespread, led by manufacturing, up 12.6 percent; commercial (retail, warehouse and farm), up 12.0 percent; private educational, up 10.0 percent; private transportation, up 9.2 percent; and power (including oil and gas), up 8.4 percent.

Most public construction categories shrank over the past 12 months, although the two largest had mixed results, Simonson said. Highway spending increased for the sixth straight month, by 1.9 percent, but was 2.2 percent below the November 2010 mark. Public educational construction was up 0.5 percent for the month and 2.8 percent year-over-year.