Steel Markets

Construction Spending Rises 0.1% in December

February 4, 2014

Construction spending inched up 0.1 percent in December and picked up a modest 4.8 percent for all of 2013. Apartments and single-family homes offset declines in private nonresidential and public projects, according to US Census Bureau data analyzed by the Associated General Contractors of America (AGC).

The AGC reported: “Construction put in place totaled $930 billion in December, 0.9 percent higher than the November total, which was revised down $5 billion from the initial estimate. For 2013 as a whole, spending was 4.8 percent above the 2012 level, a slowing from the 9 percent gain that year. Private residential construction spending increased by 2.6 percent in December and jumped 18 percent for all of 2013. Private nonresidential spending dipped 0.7 percent for the month and 0.4 percent for the full year. Public construction spending dropped 2.3 percent for the month and 2.8 percent for the year.”

Expansion of activity in the oil and gas sector should boost construction for private nonresidential building. Ken Simonson, the association’s chief economist, commented, “Many regions will experience more work on pipelines, railroads, manufacturing plants, and even fueling facilities for trucks and buses that convert to natural gas. In addition, communities in the drilling areas will get more housing, hotels and retail projects. As a result, private nonresidential spending should grow at a 6-10 percent rate in 2014 overall.”

Private residential construction, particularly single-family housing, is expected to slow in growth but increase overall by 10 percent in 2014. Public construction spending, says Simonson, will match or be below 2013 levels.

Infrastructure construction, such as highway and streets, grew 1.8 percent in December and was up by 1.0 percent for the full year. But AGC warns that federal funding for highway and transit projects may drop when the law supporting projects expires in September. AGC encourages Congress to act on legislation to authorize river, harbor and flood-control infrastructure.