Construction Spending Hits Four-Year High in July

New single-family and multifamily construction advance, along with major private nonresidential types.

Total construction spending hit a four-year high in July as private residential and nonresidential activity increased while public spending declined, according to an analysis of new Census Bureau data by the Associated General Contractors of America. Association officials urged lawmakers in Washington to make infrastructure investment a top federal priority before funding runs out at the end of September.

“The patterns seen earlier this year reappeared in July, with strong year-over-year gains in single- and multifamily building, a range of results for private nonresidential categories, and deepening downturns in most public segments,” said Ken Simonson, the association's chief economist. “These trends are likely to hold for the remainder of 2013.”

Construction put in place in July, $901 billion, was the highest mark since June 2009, and an increase of 0.6% from the month before and 5.2% from July 2012. Totals for May and June were revised up, implying a stronger second quarter for the overall economy than the government reported last week.

Private residential spending rose 0.6% for the month and 17% from July 2012. New single-family construction climbed 0.5% in July and 29% from a year ago. New multifamily spending edged up 0.1% in July and advanced 39% year-over-year.

Private nonresidential spending gained 1.3% in July and 2.0% year-over-year, Simonson observed. Components with substantial increases since July 2012 included lodging, up 33%; warehouses, up 11%; and the largest private nonresidential category, power—including oil and gas as well as electricity—up 5%. However, there were decreases in private health care construction, down 3%; and communication, down 12%, Simonson noted.

Public construction spending slipped 0.3% for the month and 3.7% over 12 months. The two largest public components both dropped: highway and street, down 1.1% in July and down 3.8% year-over-year; and educational, down 1.5% and 12%, respectively, Simonson said.

“Recent reports suggest the full year will continue to bring mixed news for construction,” Simonson said. “Multifamily construction will keep expanding and single-family homebuilding should do well in most regions. Private nonresidential spending will be very uneven and public construction spending remains threatened.”

Association officials urged policy makers in Washington to enact federal spending bills by September 30 in order to avoid costly interruptions to federally funded construction projects. They said even a short lapse in appropriations could be very disruptive to construction schedules for infrastructure and building projects.

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