According to the latest report from Associated General Contractors of America (AGC), construction spending in January increased 1.8% to $1.369 trillion from December and 6.8% from January 2019, with all major segments logging gains.
“Public spending on infrastructure, along with single-family housing, was exceptionally robust in January,” said Ken Simonson, AGC’s chief economist.
Public construction spending grew 2.6% from December and 12.6% from 2019. The largest public category was highway and street construction, which jumped 11.7%. Public spending on transportation infrastructure increased 11.5%. Educational construction rose 4.1% year over year.
Private residential spending grew 2.1%for the month and was led by a 2.8% jump in single-family homebuilding. Private nonresidential spending grew 0.8% for the month and 0.5% increase compared to January 2019. Multifamily construction remained flat.
Among the largest private nonresidential segments, power construction increased 5.7% year-over-year, manufacturing construction increased 5% and office construction rose 0.4%, while commercial construction (retail, warehouse and farm structures) declined 5.5%.
AGC officials said the spending data shows the U.S. economy’s strength.
“Demand for construction is benefiting from the strength of the overall economy and robust public-sector investments in many types of construction projects,” said Stephen E. Sandherr, AGC’s CEO.
According to the report, this good fortune could eventually be spoiled by uncertainty from the coronavirus. In particular, construction components and machines sourced in hard-hit countries like China.
“While overall economic conditions remain favorable, future construction spending levels may be affected by the growing uncertainties related to the coronavirus and its impact on the supply chain for construction components, especially those manufactured in hard-hit countries,” Simonson said.
However, he added, to date, no contractors have reported supply problems that are impacting their projects.