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Construction Spending Dives in December; Highways Up


Construction spending during December 2019 was estimated at a seasonally adjusted annual rate of $1,327.7 billion, 0.2% (± 0.8%) below the revised November estimate of $1,329.9 billion. The December figure is 5.0% (±1.3%) above the December 2018 estimate of $1,264.8 billion. The value of construction in 2019 was $1,303.5 billion, 0.3% (±1.0%) below the $1,307.2 billion spent in 2018.

In December, the estimated seasonally adjusted annual rate of public construction spending was $336.4 billion, 0.4% (±1.3%) below the revised November estimate of $337.7 billion. 

• Highway construction was at a seasonally adjusted annual rate of $99.9 billion, 3.1% (±3.1%) above the revised November estimate of $96.9 billion. 

• Educational construction was at a seasonally adjusted annual rate of $80.4 billion, 2.1% (±2.1%) below the revised November estimate of $82.1 billion. 

The value of public construction in 2019 was $328.8 billion, 7.1% (±1.8%) above the $307.1 billion spent in 2018. Educational construction in 2019 was $79.0 billion, 3.4% (±3.6%) above the 2018 figure of $76.4 billion and highway construction was $98.8 billion, 8.8% (±4.6%) above the $90.8 billion in 2018.

Spending on private construction was at a seasonally adjusted annual rate of $991.2 billion, 0.1% (±0.5%) below the revised November estimate of $992.2 billion. 

• Residential construction was at a seasonally adjusted annual rate of $540.7 billion in December, 1.4% (±1.3%) above the revised November estimate of $533.3 billion. 

• Nonresidential construction was at a seasonally adjusted annual rate of $450.5 billion in December, 1.8% (±0.5%) below the revised November estimate of $458.9 billion.

The value of private construction in 2019 was $974.7 billion, 2.5% (±1.0%) below the $1,000.2 billion spent in 2018. Residential construction in 2019 was $514.3 billion, 4.7% (±2.1%) below the 2018 figure of $539.6 billion and nonresidential construction was $460.4 billion, virtually unchanged from (±1.0%) the $460.5 billion in 2018.

“Both the actual spending totals for December and our members’ expectations for 2020 point to a positive year for all major categories of construction,” said Associated General Contractors of America Chief Economist Ken Simonson. “Continuing job gains throughout the nation, along with low interest rates, make a good year for residential construction especially likely, while spending many nonresidential categories should match or exceed 2019 levels.”

“The transition from a private construction-led recovery to a public construction-led recovery is complete,” said Associated Builders and Contractors Chief Economist Anirban Basu. “During the years after the Great Recession, public construction waned as state and local governments struggled fiscally in the wake of diminished assessed property values, cautious consumers and slow income growth. Meanwhile, private construction was fueled by steady economic growth and a low cost of capital.

“But in recent years, private construction spending volumes have stopped growing, and in certain instances have been shrinking,” said Basu. “That was the situation in December, with nonresidential construction volumes in segments like commercial and lodging down on both monthly and year-ago basis. Spending on office construction, a category supported in part by the ongoing development of data centers, also slipped for the month.

“Meanwhile, improved state and local government finances continue to help perpetuate the public construction spending cycle,” said Basu. “With income tax collections rising as more people find jobs and secure raises, property tax collections having recovered and sales tax collections climbing in conjunction with consumer spending, there is more money available for many public priorities, including infrastructure. A majority of states raised gas taxes during the previous decade, generating even greater financial support for public construction. Accordingly, the infrastructure category of ABC’s Construction Backlog Indicator has been elevated in recent months, ABC’s Construction Confidence Indicator shows that contractors remain upbeat, and many public segments have experienced double-digit growth in construction spending during the past 12 months for which data are available, including highway/street, water supply, and public safety.”