Construction Spending: 2016 on the rise, 2017...TBD

Construction|Real Estate

By Benjamin O'Leary

The United States Department of Commerce on January 3, 2017 reported that construction spending continues to be on the rise, reaching an over ten-year high. Construction spending in the U.S. reached $1.18 trillion during November 2016, up approximately 1.0% from October 2016 according to the report issued by the Department of Commerce. The year-over-year increase in total construction spending was approximately 4.1% from spending in November 2015.

The positive trends in construction spending are being driven by the private residential segment, which includes new single-family home starts and home renovations. Residential construction spending reached spending levels of approximately $469.7 billion during the month of November 2016, an increase of approximately $13.5 billion from spending in November 2015.

Nonresidential construction also posted a favorable increase of approximately 0.8% from October 2016’s spending levels. The increase in nonresidential spending was a continuation of steady increases in investments in the educational sector, hotel, and highway projects throughout 2016.

These positive trends in both the residential and nonresidential segments give 2017 a favorable outlook. President-elect Donald J. Trump’s plan would bolster growth in the industry as his administration’s policy has indicated desires to spend nearly $1 trillion on infrastructure. While construction spending has shown promising increases during 2016, there is still much uncertainty as to how Trump’s administration will affect the construction industry. 

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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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