Construction spending slipped in November from a month earlier but maintained a strong rate of year-over-year growth in all major categories, according to an analysis by the Associated General Contractors of America. Association officials noted that the new spending data demonstrate a lot of uncertainty within the private sector about the need for new projects while state and local government officials are worried about budget constraints.
"The November data show divergent trends for residential, private nonresidential, and public construction," said Ken Simonson, the association's chief economist. "Compared to October levels, spending dipped overall but climbed for homebuilding, school, and office construction. Previously, fast-growing categories such as multifamily, manufacturing, and lodging construction have stalled for the past two to four months. Yet nearly every type of construction has outperformed its 2014 pace through the first 11 months of 2015."
Construction spending in November totaled $1.122 trillion at a seasonally adjusted annual rate, 0.4% lower than the October total and 10.5% higher than in November 2014, Simonson said. But the November total was only 0.5% higher than in August, indicating construction has leveled off recently, he added.
Private nonresidential construction spending fell 0.7% for the month but rose 13.6% over 12 months. Simonson observed that the total had been nearly flat since July. He noted that manufacturing construction, the largest private nonresidential segment, slumped 4% in the latest month but increased 29% year-over-year. In contrast, private office construction increased 1.7% and 23%, respectively.
Public construction spending sank 1% from a month before but climbed 6% from 12 months earlier. Of the two biggest public categories, highway and street construction dropped 1.3% for the month but rose 5.6% year-over-year, while spending on educational facilities soared 5% for the month and 15% for the year.
Association officials said that the new spending data is consistent with the findings in the Construction Hiring and Business Outlook that AGC of America and Sage has released.
"The question we hope to answer is whether demand will continue to grow in 2016 given some of the headwinds our economy is currently facing," said Stephen E. Sandherr, the association's chief executive office.