Summary
- Total construction spending rose 0.2% during December. Overall spending ended 2021 up 9.0% over the year.
- The small gain in total construction outlays was owed entirely to a 1.1% increase in residential spending.
- Nonresidential spending fell 0.7% in December, ending a streak of five monthly gains.
- While overall spending rose less than expected, data for the prior two months were revised higher, with October’s gain raised to 0.9% from a previously reported 0.4%, and November now showing a 0.6% rise compared to the previously reported 0.4%.
- Building material and labor shortages continue to cause delays and push input costs higher, bedeviling much of the construction industry.
- The residential sector continues to have the wind at its back despite rising mortgage rates and a growing list of supply-side struggles. Spending on residential projects ended the year up 14.7% compared to December 2020.
- Declines in spending on educational, commercial, healthcare and manufacturing projects dragged down overall nonresidential outlays. Office, lodging, power and highway & street spending improved during the month, however.
- Nonresidential activity has been trending in the right direction in recent months, despite uncertainty brought on by the pandemic, particularly for office construction.
- Public sector construction fell 1.6% in the month and ended the year down 2.9%.
- Despite recent weakness, public construction is poised for stronger growth over the next few years. In addition to the Infrastructure Investment and Jobs Act, which provides nearly $550 billion in new spending for a wide variety of infrastructure projects, state and local governments are flush with cash from strong tax receipts and previous rounds of federal aid. Much of this spending is going into street improvements, greenways and streetscapes.