Overall U.S. construction spending rose to a 2.5-year high in June, according to the Associated General Contractors of America. Total construction spending gained 0.4 percent in June and 7.0 percent year-over-year. “The improvement is showing up in a wide range of residential and nonresidential categories,” said Ken Simonson, AGCA’s chief economist. (See chart.)
Reasons for the uptick include the unusually mild winter in most parts of the Northeast and Midwest, which allowed many projects to progress faster than expected during 1Q12, according to Kermit Baker, American Institute of Architects’ chief economist. Acceleration is expected to continue with a 6.2 percent construction gain projected for 2013.
Though an upturn in nonresidential construction activity is usually preceded by a housing recovery, the single-family home market has not contributed much to the current construction turnaround, according to the AIA. Exports to international markets and commercial/industrial facility activity have contributed to this year’s construction gains.
Year-Over-Year Non-Residential Construction Gains
June 2011-June 2012
Power and energy (including oil and gas-related projects), 26%
Transportation (trucking and rail facilities), 17%
Source: Associated General Contractors of America