Gains in all three major construction categories pushed total construction to its highest point since April 2006 when a housing expansion fueled a building boom.
The U.S. Census Bureau of the Department of Commerce reported that construction spending during November 2016 was estimated at a seasonally adjusted annual rate of $1,18 billion, 0.9 percent (±1.5 percent) above the revised estimate of $1,171.4 billion. The November figure is 4.1 percent (±2.0 percent) above the November 2015 estimate of $1,135.5 billion.
During the first 11 months of this year, construction spending amounted to $1,070.9 billion, 4.4 percent (±1.0 percent) above the $1,025.5 billion for the same period in 2015.
Highway construction was at a seasonally adjusted annual rate of $94.6 billion, 1.1 percent (±5.4 percent) above the revised October estimate of $93.6 billion, and 10.5 percent above the November 2015 estimate of 85.6 billion.
Spending on private construction was at a seasonally adjusted annual rate of $892.8 billion, 1.0 percent (±1.5 percent) above the revised October estimate of $884.3 billion. Residential construction was at a seasonally adjusted annual rate of $462.9 billion in November, 1.0 percent (±1.3 percent) above the revised October estimate of $458.2 billion.
Nonresidential construction was at a seasonally adjusted annual rate of $429.9 billion in November, 0.9 percent (±1.5 percent) above the revised October estimate of $426.2 billion.
In November, the estimated seasonally adjusted annual rate of public construction spending was $289.3 billion, 0.8 percent (±2.5 percent) above the revised October estimate of $287.1 billion. Educational construction was at a seasonally adjusted annual rate of $71.6 billion, 2.1 percent (±2.5 percent) above the revised October estimate of $70.1 billion.
“This strong spending report contributed to a bright short-term outlook for the commercial and industrial construction sectors,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Nonresidential construction spending is up approximately 5 percent on a year-over-year basis, and momentum should build further.
“With a new presidential administration coming to Washington there is a presumption that the economic dynamics of the near-term future will be markedly different than they have been,” said Basu. “If the last few weeks are any indication, the 2017 economy will be associated with tax cuts, more government spending, less financial regulation, faster economic growth, a stronger U.S. dollar, robust stock market performance and greater overall CEO confidence. That should translate into improved construction spending moving forward.
“It should be noted that data for November largely reflect the economic dynamics of the past,” said Basu. “Many construction firms have reported that they remain busy but have become concerned that work could dry up in certain markets in 2017 or 2018. This has been due to a combination of factors, including evidence of overbuilding in segments such as lodging and office buildings, even in Tier 1 markets like New York and Miami.
“Some are of course unnerved by prospects for shrinking exports given a stronger U.S. dollar, larger budget deficits and rising interest rates,” said Basu. “These are legitimate concerns and may ultimately serve to suppress U.S. economic dynamism. However, for now, the nonresidential construction outlook remains promising. The major source of uncertainty regarding the near-term outlook stems from whether the incoming administration will successfully pass an infrastructure package and how quickly such legislation would translate into stepped-up public construction spending.”