Construction Spending Continued its 2016 Climb
U.S. construction spending has been more or less on the rise (with a few dips along the way) for years. And while December data isn’t yet available, it looks like 2016 was a good year for the industry.
Overall U.S. construction spending continued to rise in November 2016, according the latest available numbers from the U.S. Department of Commerce. The seasonally adjusted annual rate is estimated at $1,182,097 billion. That’s 0.9 percent higher than the previous month and 4.1 percent higher than November 2015.
Total spending rose in both private and public construction. A few highlights:
Residential up. Residential spending had an estimated seasonally adjusted annual rate of $469,669 million in November. That puts residential spending 1 percent higher than in October and 3 percent higher than in November 2015.
Nonresidential up. Dollars for nonresidential construction put in place increased 0.8 percent from October to November 2016, and 4.9 percent from November 2015. Within this broad category, some types of construction fared much better than others.
- Lodging and office construction up big. Compared with November 2015, nonresidential lodging (hotels, motels and similar properties) and office construction had the biggest spending increases. Lodging construction rose 28.4 percent, while office construction rose 27.5 percent. Spending for both was also up from October 2016: 6.9 percent for lodging, 2 percent for office.
- Religious flat with 2015. In November, religious construction spending jumped 9.8 percent from the previous month’s estimated numbers, although it remained flat compared with November 2015. This category includes churches, synagogues, mosques and other common houses of worship, but not certain other buildings, such as hospitals and schools, owned by religious organizations.
- Biggest drops in communication and manufacturing. Overall, the biggest drops since November 2015 were in communication (down 13.8 percent) and manufacturing construction (down 8.1 percent).
Private rose more than public. Commerce Department data show the biggest annual increase went to private construction. As of November 2016, private construction spending was $892,820 million, up 4.6 percent from November 2015.Total public construction rose 2.6 percent from 2015.
Estimates for December construction spending have not yet been released by the Commerce Department, but one construction measure suggests 2016 ended on a high note, at least for the nonresidential sector. The Dodge Momentum Index, a monthly measure of commercial planning intentions, increased 2.9 percent in December, to 136.7. That caps off a 38 percent climb over 2016.
Contributing to the December increase were eight big projects that entered planning. These include a $400 million mixed-use building in Atlanta, a $351 million office tower in San Francisco, a $140 million renovation to the Quicken Loans Arena in Cleveland and a $130 million high school in Sherman, Texas.
According to Dodge Data & Analytics, the Momentum Index is now at an eight-year high —but it’s still more than 25 percent below its previous peak, reached at the end of 2007. A press release issued earlier in January suggested that commercial construction activity has more room to grow in 2017, “despite being at a more mature phase of its cycle.”
What happens in 2017 is anyone’s guess, of course, but Construction Business Owner has predicted positive growth in most markets.
By Hope Rast
Hope Rast is a freelance writer in Georgia and Florida. She is a former managing editor and current contributor at Gulfshore Business magazine.