Tund | adobe.stock.com
The Arlington, Virginia-based Associated General Contractors of America (AGC) reports construction spending in the United States declined 0.2 percent in January, citing both severe weather and a slump in commercial sector construction as factors.
Providing better news, spending climbed strongly compared with last January, with year-over-year gains in every category, the AGC says.
“The dip in January is more likely due to bad weather than to weakening demand overall,” says Ken Simonson, the association’s chief economist.
Spending on segments most exposed to severe weather declined. Highway and street construction fell by 2.1 percent this January compared with the prior month while water supply spending dropped by 1.4 percent.
Simonson says some construction segments may be showing signs of being affected by broader economic conditions.
“High financing costs and falling rents are dragging down income-dependent sectors like warehouse and retail construction, while single-family homebuilding and manufacturing remain solid,” he says.
Construction spending, not adjusted for inflation, totaled more than $2.1 trillion at a seasonally adjusted annual rate this January. That figure is 0.2 percent below the upwardly revised December 2023 rate, but 11.7 percent above the January 2023 level.
Spending on private residential construction rose by 0.2 percent month on month and 5.2 percent year over year. “Single-family construction climbed 0.6 percent from December, the ninth-straight increase,” the AGC says, while spending on multifamily projects, which has trended down since last August, declined 0.4 percent this January.
AGC says spending on private nonresidential construction inched down 0.1 percent in January but rose 15.2 percent compared with January of last year.
Manufacturing construction rose for the seventh month in a row, by 2.0 percent, but commercial construction slumped 3.3 percent as warehouse, retail and farm components each declined.
Investments in power, oil and gas projects rose 0.3 percent; spending on private offices and data centers edged up 0.1 percent, but health care construction fell 0.2 percent, according to Census Bureau figures.
Public construction spending this January decreased 0.9 percent for month to month but jumped 20.1 percent compared with January 2023.
