US construction spending stutters

Construction spending in the US fell in November 2015 from a month earlier to US$ 1.122 trillion, but maintained a strong rate of year-on-year growth in all major categories, according to a report by the Associated General Contractors of America.

The Association noted that the new spending data demonstrated a lot of uncertainty within the private sector about the need for new projects, while state and local government officials are worried about budget constraints.

Construction spending in November 2015 was 0.4% lower than the October total, but 10.5% higher than in November 2014. However, the November 2015 total was only 0.5% higher than in August, indicating construction has levelled off recently, according to Ken Simonson, the association's chief economist.

He said, "The November data shows divergent trends for residential, private non-residential and public construction. Compared to October levels, spending dipped overall but climbed for homebuilding, school and office construction.

“Previously fast-growing categories such as multifamily, manufacturing and lodging construction have stalled for the past two to four months. Yet nearly every type of construction has outperformed its 2014 pace through the first 11 months of 2015."

Private residential spending increased 0.3% for the month of November and 10.8% over 12 months. Simonson noted that the Census Bureau substantially revised several years of estimates for residential improvements, which had the effect of reducing the reported growth rate for residential spending in recent months.

Spending on apartment building construction fell 0.7% for the month of November, but was 25% higher than in November 2014. Single-family spending rose 0.6% for the month of November and 9.3% for the year, while on housing spending on improvements rose 0.1% in November and 8.3% for the year.

Private non-residential construction spending fell 0.7% for November, but rose 13.6% over 12 months. Simonson said that the total had been nearly flat since July, and manufacturing construction − the largest private non-residential segment − slumped 4% in November but increased 29% year-on-year. In contrast, private office construction increased 1.7% for November and 23% for the year.