According to the U.S. Census Bureau, construction spending during January 2023 was estimated at a seasonally adjusted annual rate of $1,825.7 billion, 0.1% (±0.7%) below the revised December estimate of $1,827.5 billion. The January figure is 5.7% (±1.2%) above the January 2022 estimate of $1,726.6 billion.
In January, the estimated seasonally adjusted annual rate of public construction spending was $383.1 billion, 0.6% (±1.2%) below the revised December estimate of $385.5 billion.
- Highway construction was at a seasonally adjusted annual rate of $117.3 billion, 0.9% (±2.8%) below the revised December estimate of $118.4 billion.
- Educational construction was at a seasonally adjusted annual rate of $84.1 billion, 0.6% (±2.0%) below the revised December estimate of $84.6 billion.
Spending on private construction was at a seasonally adjusted annual rate of $1,442.6 billion, virtually unchanged from (±0.5%) the revised December estimate of $1,442.0 billion. Residential construction was at a seasonally adjusted annual rate of $847.4 billion in January, 0.6% (±1.3%) below the revised December estimate of $852.1 billion. Nonresidential construction was at a seasonally adjusted annual rate of $595.2 billion in January, 0.9% (±0.5%) above the revised December estimate of $589.9 billion.
“Laws enacted more than six months ago created unprecedented funding and tax credits for a wide range of transportation, environmental, energy and manufacturing projects,” said Ken Simonson, Associated General Contractors of America (AGC) chief economist. “But few contractors have actually won contracts yet.”
“Contractors, developers and state agencies have been hamstrung by the lack of clear or realistic guidance implementing under these laws,” said Stephen E. Sandherr, the association’s chief executive officer. “It is high time to put in place the rules that will enable these vitally needed projects to be built.”
“Nonresidential construction spending inched higher to start the year and is just below the all-time high established in November,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “On a year-over-year basis, spending in the nonresidential sector continues to outpace inflation. That’s largely attributable to strength in the industrial segment; manufacturing-related construction spending surged 5.9% in January and is up by an astonishing 53.6% since January 2022. With the CHIPS and Science Act directing $280 billion into semiconductor manufacturing and an ongoing desire to reshore manufacturing capacity, the segment should continue to thrive.
“Excluding manufacturing-related construction, nonresidential spending actually declined in January,” continued Basu. “A combination of headwinds, including severely elevated borrowing costs, ongoing labor shortages and still-high input costs are likely to blame. Despite these factors and a gloomy economic outlook, a majority of contractors continue to expect their sales to increase over the next six months, according to ABC’s Construction Confidence Index.”