Construction spending declined in November from the previous month, but rose 7.7 percent from a year ago.
Overall construction spending in November fell 0.3 percent from October, according to data released by the Associated General Contractors of America (AGC). Compared to data from 12 months ago, spending has shown a gain of 7.7 percent.
The association predicts that 2013 federal tax resolutions will lead to an increase in private construction investment, while unresolved federal construction spending issues will halt spending in the public sector.
Ken Simonson, AGC’s chief economist, noted that private single- and multi-family spending continued growing strongly. Spending on new single-family houses climbed 1.3 percent for the month and 29 percent year-over-year, while multi-family spending rose 0.5 percent and 46 percent, respectively.
"Despite a drop of 0.7 percent in November, the year-over-year total was up by 8.2 percent, and this figure appears poised to return to double-digit percentage gains in the next few months,” Simonson said.
Simonson pointed out four categories of private nonresidential construction that posted increases of more than 10 percent between November 2011 and November 2012, although results for the latest month were mixed. Lodging construction declined 1.3 percent for the month but jumped 26 percent over 12 months. Office construction shrank 0.9 percent from October but grew 17 percent from November 2012. Private transportation construction, principally by rail and trucking companies, added 3.4 percent for the month and 16 percent year-over-year. Power and energy construction, including spending on oil and gas fields and pipelines, contracted 1.4 percent from October but rose 14 percent over 12 months.
Simonson observed that public construction spending, which has alternated between monthly increases and decreases in 2012, sank 0.4 percent in November and 2.6 percent year-over-year. He said the two biggest categories of public spending both rose for the month but declined from November 2011 levels. Highway and street construction spending was up 0.5 percent from October but down 6.0 percent from a year ago, while educational construction spending rose 0.1 percent for the month but fell 3.4 percent from year-ago levels.
Stephen Sandherr, CEO of AGC, urged Congress and the administration to make infrastructure investment a top priority in 2013. "Congress and the president have provided some tax certainty that provides a foundation for economic growth. But their jobs are far from completed. It is vital that the states devastated by Hurricane Sandy receive funding immediately for recovery work. In addition, lawmakers should not target construction spending for further cuts when they turn to spending decisions in the next two months."