The U.S. Census Bureau announced that construction spending during January 2020 was estimated at a seasonally adjusted annual rate of $1,369.2 billion, 1.8% (±0.8%) above the revised December estimate of $1,345.5 billion.
The January figure is 6.8% (±1.3%) above the January 2019 estimate of $1,282.5 billion.
In January, the estimated seasonally adjusted annual rate of public construction spending was $346.5 billion, 2.6%(±1.5%) above the revised December estimate of $337.8 billion. Highway construction was at a seasonally adjusted annual rate of $103.9 billion, 5.4% (±4.6%) above the revised December estimate of $98.6 billion. Educational construction was at a seasonally adjusted annual rate of $81.5 billion, 0.7% (±1.8%) above the revised December estimate of $80.9 billion.
Spending on private construction was at a seasonally adjusted annual rate of $1,022.7 billion, 1.5% (±0.7%) above the revised December estimate of $1,007.6 billion.
- Residential construction was at a seasonally adjusted annual rate of $554.8 billion in January, 2.1% (±1.3%) above the revised December estimate of $543.6 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $468.0 billion in January, 0.8% (±0.7%) above the revised December estimate of $464.1 billion.
“Public spending on infrastructure, along with single-family housing, was exceptionally robust in January,” said Associated General Contractors of America Chief Economist Ken Simonson. “While overall economic conditions remain favorable, future construction spending levels may be affected by the growing uncertainties related to the coronavirus and its impact on the supply chain for construction components, especially those manufactured in hard-hit countries.”
Simonson noted that many construction materials, machines and parts are sourced, at least in part, from China and other countries where production and transportation have been disrupted by the virus. He added that, to date, no contractors have reported supply problems that are impacting their projects.
“Demand for construction is benefitting from the strength of the overall economy and robust public-sector investments in many types of construction projects,” said Stephen E. Sandherr, the association’s chief executive officer. “The best way to keep the economy healthy and stave off any short-term impacts the coronavirus may have is for public officials to continue investing in needed infrastructure and other public works projects.”
“Despite all the focus on the dislocating impacts of the coronavirus, construction – a key element of the U.S. economy – continues to perform,” said Associated Builders and Contractors Chief Economist Anirban Basu. “For the first time in history, the volume of nonresidential construction spending exceeded $800 billion on an annualized basis and now stands at an all-time high. Both public and private nonresidential construction spending expanded to start 2020, a reflection of the broader economic momentum evident over the last several years. Backlog remains healthy, according to the ABC Construction Backlog Indicator, and with the nation continuing to add jobs, there is more demand for public and private construction and additional funding resources. This is especially apparent in several infrastructure categories, in which spending growth continues to be robust due to healthier state and local government finances.
“That said, there is no question that the coronavirus has significantly compromised both global and national economic momentum over the past two to three weeks,” said Basu. “U.S. manufacturing and shipping segments have begun to soften, with significant reductions in container volume already being reported at several major U.S. ports. While the crisis is expansive enough to potentially drive the economy into recession, the question is whether the crisis is severe enough to countervail current U.S. economic momentum.
“At this time, it is unclear how coronavirus will affect materials prices,” said Basu. “Certain construction components, whether from China or elsewhere, may experience inadequate supply during the weeks ahead, and the more general impact will be decreased input prices due to lower demand. This is likely to be the case for a number of key commodities, including those related to energy.”