The U.S. Census Bureau announced that construction spending during December 2021 was estimated at a seasonally adjusted annual rate of $1,639.9 billion, 0.2% (± 0.8%) above the revised November estimate of $1,636.5 billion. The December figure is 9.0% (±1.0%) above the December 2020 estimate of $1,504.2 billion.
The value of construction in 2021 was $1,589.0 billion, 8.2% (±0.8%) above the $1,469.2 billion spent in 2020.
Spending on private construction was at a seasonally adjusted annual rate of $1,292.9 billion, 0.7% (±0.5%) above the revised November estimate of $1,283.8 billion.
- Residential construction was at a seasonally adjusted annual rate of $810.3 billion in December, 1.1% (±1.3%) above the revised November estimate of $801.1 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $482.6 billion in December, virtually unchanged from (±0.5%) the revised November estimate of $482.7 billion.
The value of private construction in 2021 was $1,242.8 billion, 12.2% (±1.0%) above the $1,107.9 billion spent in 2020. Residential construction in 2021 was $774.9 billion, 23.2% (±2.1%) above the 2020 figure of $628.9 billion and nonresidential construction was $467.9 billion, 2.3 % (±1.0%) below the $479.0 billion in 2020.
In December, the estimated seasonally adjusted annual rate of public construction spending was $347.0 billion, 1.6%(±1.3%) below the revised November estimate of $352.7 billion. Highway construction was at a seasonally adjusted annual rate of $103.5 billion, 0.1% (±3.5%) above the revised November estimate of $103.4 billion. Educational construction was at a seasonally adjusted annual rate of $81.0 billion, 1.4% (±1.5%) below the revised November estimate of $82.2 billion.
The value of public construction in 2021 was $346.2 billion, 4.2% (±1.5%) below the $361.2 billion spent in 2020. Highway construction was $99.7 billion, 0.2% (±3.6%) above the $99.5 billion in 2020 and educational construction in 2021 was $82.4 billion, 7.6% (±3.0%) below the 2020 figure of $89.1 billion.
“Demand for new housing remains strong, while demand for nonresidential projects has been variable and most types of public sector investments in construction are declining,” said Ken Simonson, Associated General Contractors of America chief economist. “Contractors coping with rising materials prices and labor shortages are also dealing with the consequences of a nonresidential market that is, at best, uneven.”
Association officials said one reason for the declines in public sector construction spending is that Congress has yet to appropriate most of the additional funds authorized in the Bipartisan Infrastructure Bill signed by President Biden last year. They urged Congress to quickly make those new funds available so state and local officials can make the investments needed to improve the nation’s aging infrastructure.
“Much of the increase in nonresidential construction spending is attributable to inflationary pressures, not actual increases in physical output,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “The fact that nonresidential spending was down in December despite rising labor costs and elevated materials prices does not bode well for near-term profitability.
“A few segments continue to create a disproportionate share of contractor opportunities,” said Basu. “Among those are the commercial segment, which includes construction of fulfillment centers and manufacturing, a segment in which construction spending has expanded more than 30% during the past year. Residential construction also continues to be a hot spot in an environment characterized by scant inventory of unsold homes and rapidly rising rents, and the strength of multifamily construction is arguably one of the most surprising aspects of the economic recovery. Overall, contractors remain confident about the next six months.
“Public construction was responsible for much of the weakness in December,” said Basu. “The expectation among many is that, as infrastructure monies begin to flow, the second half of the year will be better than the first. It is possible that infrastructure dollars will not begin to forcefully affect the marketplace until 2023. Time will tell.”