Construction Spending Rose in January from December, January 2021, Reports AGC

Construction spending increased in January compared to both December and a year ago, with strong gains in private nonresidential and residential construction but mixed results for public spending, according to an analysis of federal spending data the Associated General Contractors of America. Association leaders urged Washington officials to speed the award of funds promised by the Bipartisan Infrastructure law.

“Private nonresidential construction, especially for manufacturing plants, has rebounded sharply in recent months, while demand for housing remains strong,” said Ken Simonson, the association’s chief economist. “But public projects have yet to grow consistently.”

Construction spending in January totaled $1.68 trillion at a seasonally adjusted annual rate, 1.3% above the upwardly revised December rate and 8.2% higher than in January 2021. Private residential construction spending rose 1.3% in January from a month prior and 13.4% from January 2021, while private nonresidential construction spending increased 1.8% from December to January and 7.3% from January 2021. In contrast, public construction spending rose 0.6% for the month but slipped 1.3% from the year-ago level.

Among residential segments, single-family construction added 1.2% over the December total and 15.4% year-over-year. Multifamily construction inched down less than 0.1% in January but rose 4.8% from a year earlier. Spending on improvements to existing owner-occupied houses increased 1.8% for the month and 13.7% year-over-year.

A surge in manufacturing construction, which gained 8.5% for the month and 31.2% year-over-year, accounted for the bulk of the private nonresidential pickup. In addition, the largest private nonresidential segment, power construction, rose 2.7% for the month but trailed the January 2021 rate by 1.4%. The next-largest segment, commercial construction, declined 0.5% in January but jumped 18.0% year-over-year, with year-over-year gains in each component: warehouses (up 22.4%), retail categories (up 15.2%) and farm (up 4.4%).

The largest public segments showed diverse results. Highway and street construction edged down 0.1% from December but rose 5.2% compared to January 2021. Educational construction was unchanged for the month and skidded 9.9% year-over-year. Transportation construction spending climbed 1.6% in January but only 0.1% year-over year.

Association officials said one reason for the uneven public sector construction spending is that Congress has not appropriated most of the extra funds authorized in the Bipartisan Infrastructure law signed by President Biden last year. In addition, the administration has added restrictions not intended by Congress. They urged Congress to quickly pass the overdue appropriations bill and the administration to stick to the wording and intent of the infrastructure bill.

“The highway, transportation and other infrastructure promised by that bill is urgently needed to tackle snarled supply chains and rising costs,” said Stephen E. Sandherr, the association’s CEO. “Congress and the administration need to fulfill the promise of the legislation right away.”