Construction spending rose in December to a six-year high of $982 billion as public construction for the year increased for the first time since 2009, according to an analysis by the Associated General Contractors of America (AGC). AGC officials said President Obama's budget proposal and his suggested infrastructure funding program should help construction spending continue to grow by accelerating debate about the best way to fund repairs to the nation's aging roads, bridges, and other public infrastructure.
"For the first time in nearly a decade there was growth in all three major construction segments-public, private nonresidential and residential," said Ken Simonson, AGC's chief economist. "If the president and Congress can work out a way to pay for long-term investments in our aging infrastructure, there is a good chance this pattern will repeat in 2015."
Construction spending in December totaled $982 billion at a seasonally adjusted annual rate, 0.4 percent higher than in November, 2.2 percent higher than in December 2013, and the highest monthly figure since December 2008, Simonson noted. The full year total of $961 billion was up 5.6 percent from 2013 and was the highest full year amount since 2008.
Private residential spending in December climbed 0.3 percent from November but slid 4.0 percent from a year earlier, while private nonresidential spending slipped 0.2 percent for the month but rose 5.3 percent year-over-year. Public construction spending increased 1.1 percent from November and 6.7 percent from December 2013. For the full year, private residential spending rose 4.1 percent, private nonresidential spending climbed 11 percent, and public spending grew 1.8 percent.
"The hottest segments in 2014 as a whole were warehouses, which leaped 50 percent, and multifamily, which climbed 34 percent," Simonson added. "Both of these categories should do well again in 2015."
Other private nonresidential segments that grew steeply in 2014 included offices (24 percent); manufacturing (16 percent); power, including oil and gas pipelines and field work (14 percent); and commercial-retail, warehouse and farm (13 percent), Simonson observed. He noted that office and retail construction included many renovation projects as well as new starts.
The two biggest public segments both grew in 2014: highways and streets (4.1 percent) and education (1.2 percent). In addition, public spending on transportation facilities such as transit, airport and ports rose 4.9 percent, Simonson said.
AGC officials said the infrastructure funding outlined in the president's latest budget will help stimulate needed debate on the best way to finance repairs and additions to the nation's vital public infrastructure. "The president's budget proposal opens the door to a healthy debate about the best way to finance our long-term infrastructure needs," said Stephen E. Sandherr, AGC's CEO. "Congress should take advantage of this opportunity and work with the president to find the right funding solution."