Construction spending starts new year with 0.2 percent drop

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Florida Construction News staff writer

Severe January weather may have slowed infrastructure construction, offsetting increased activity in single home building.

Total construction spending slipped from December to January amid widespread severe weather, but climbed strongly compared to January 2023, with year-over-year gains in every category, according to an analysis of a new government report that the Associated General Contractors (AGC) of America.

However, some construction segments appear to be impacted by broader economic conditions.

“The dip in January is more likely due to bad weather than to weakening demand overall,” said Ken Simonson, the association’s chief economist. “But high financing costs and falling rents are dragging down income-dependent sectors like warehouse and retail construction, while single-family homebuilding and manufacturing remain solid.”

Construction spending, not adjusted for inflation, totaled $2.102 trillion at a seasonally adjusted annual rate in January. That figure is 0.2 percent below the upwardly revised December rate, but 11.7 percent above the January 2023 level.

Spending on private residential construction gained 0.2 percent for the month and 5.2 percent year-over-year. Single-family construction climbed 0.6 percent from December, the ninth-straight increase. Spending on multifamily projects, which has trended down since August, declined 0.4 percent in January.

Private non-residential construction dropped 0.1 percent in January but rose 15.2 percent from January 2023.

Manufacturing construction increased for the seventh month in a row, while commercial construction fell 3.3 percent with warehouse, retail, and farm components falling.

“Federal investments in construction and infrastructure are likely to remain the largest driver of demand as long as private-sector finance costs remain high,” said Stephen E. Sandherr, the association’s chief executive officer. “Eliminating needless confusion and delay in approving federal projects will keep construction demand, and employment, strong for the foreseeable future.”

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