OUR THOUGHTS ON:

Construction Spending on the Upswing in 2016

Construction

By Patrick Kerns

Construction annual spending was up 1.5% in January 2016 for a projected annualized total of $1,140 billion dollars for 2016.  This marks a trend of continuing increases over the past year that has seen construction spending rise almost 10.4% since January 2015.  Construction spending is usually a good signal of the strength of the U.S. economy.

This rate shows continued improvement in the overall economy since the annual spending rate hit a low of $788.3billion in 2011, as the county exited the great recession.  This report shows that increases from the past four years have continued in 2016, which many hope signals that the recovery is alive and well in the construction industry.

Some of the largest movers month over month were highway and street construction, which increased 14.1 billion or 14.1%, conservation and development, which was up 10% or $685M, and commercial space (combined for public and private) slipped $6.2 billion or about 4%.  Private residential construction was essentially flat from December at $438.9 billion dollars, which signals the continued challenges in that aspect of the construction market.

It remains to be seen what impact the sharp decline in energy prices will have on the construction industry, since in recent weeks, many of the world’s largest energy firms have announced plans to significantly curtail or cancel capital projects to conserve their capital at this time.  However, continued drops in the unemployment rate and additional money in consumers’ pockets may help to stimulate demand for housing as people begin to feel more confident about the economy.

Read the full text of the report along with other schedules.

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Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

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