According to the U.S. Census Bureau, construction spending during November 2022 was estimated at a seasonally adjusted annual rate of $1,807.5 billion, 0.2% (±0.8%) above the revised October estimate of $1,803.2 billion. The November figure is 8.5% (±1.3%) above the November 2021 estimate of $1,665.2 billion.
During the first 11 months of 2022, construction spending amounted to $1,657.6 billion, 10.5% (±1.0%) above the $1,499.8 billion for the same period in 2021.
In November, the estimated seasonally adjusted annual rate of public construction spending was $381.1 billion, 0.1% (±1.5%) below the revised October estimate of $381.6 billion. Highway construction was at a seasonally adjusted annual rate of $115.0 billion, 1.0% (±3.3%) below the revised October estimate of $116.2 billion.
Other infrastructure categories also slipped. Spending declined 0.2% for transportation facilities and 2.0% for water supply projects. These decreases offset upticks of 0.1% for education construction and 0.3% for sewage and waste disposal construction.
Spending on private construction was at a seasonally adjusted annual rate of $1,426.4 billion, 0.3% (±0.5%) above the revised October estimate of $1,421.6 billion.
- Residential construction was at a seasonally adjusted annual rate of $868.0 billion in November, 0.5% (±1.3%) below the revised October estimate of $872.4 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $558.3 billion in November, 1.7% (±0.5%) above the revised October estimate of $549.2 billion.
“A variety of private nonresidential categories, as well as multifamily projects, posted solid spending gains in November,”said Ken Simonson, Associated General Contractors of America chief economist. “Many of these segments should continue to do well in 2023. But the timing of public construction, while well-funded, remains unclear.”
“The average nonresidential contractor starts 2023 with considerable backlog,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Not coincidentally, contractors also have significant confidence regarding current year prospects, according to ABC’s Construction Confidence Index, which indicates expectations for growth in sales and employment with margins remaining stable.
“November’s construction spending report suggests that this confidence is warranted,” said Basu. “However, there are countervailing considerations. First, growth in nonresidential construction spending in November was not especially broad. Much of the growth came from the manufacturing category, which is partially attributable to construction related to large-scale chip manufacturing facilities. The balance of growth came mostly from conservation and development, which includes flood control expenditures. Were it not for those two categories, nonresidential construction spending would have been roughly flat in November.
“Second, backlog could dry up,” said Basu. “Anecdotal evidence suggests that banks are more cautious in their lending to the commercial real estate and multifamily segments. Fears of recession this year remain pervasive in an environment characterized by high and rising interest rates. It will be interesting to see how well backlog will hold up as contractors continue to build and the economy heads toward what is likely to be a Federal Reserve-induced recession.”