U.S. construction spending rose in all three sectors — commercial, public and residential — in December 2014, with total construction spending ending the year at the highest level since the Great Recession, a new U.S. Census Bureau report says.
U.S. construction spending hit $982 billion on a seasonally adjusted annual basis in December, the bureau said. That is the single highest monthly figure reported since December 2008 and represented an increase of 0.4% from the previous month and 2.2% from the previous year, the report said. For the entire year, total construction spending rose 5.6% from year-end 2013 and, at $982 billion, was the highest total since 2008.
The hottest segments in 2014 were tagged by one economist as warehouses, which soared 50%, and multifamily, which was up 34%. Both segments are expected to perform well again this year.
Private nonresidential construction spending in 2014 was up a healthy 11%, followed by private residential at 4.1% and public spending at 1.8%.
Private office construction increased 24%, manufacturing was up 16% and commercial retail, warehouse and farm construction grew 13%, the economist said, noting that office and retail construction included many renovations and repositioning projects, along with new starts.
New office space deliveries were in sync with demand, rising 9% in 2014 to 47 million square feet, according to a CoStar Portfolio Strategy researcher. The office construction pipeline jumped 32% to 107 million square feet in 2014.
Although the construction sector was firmly in recovery mode in most areas of the country, nonresidential construction backslid in the last two months of 2014, according to economists. The loss of momentum should represent only a slight dip in overall industry momentum in 2015, one economist said, adding that there was solid recovery for the industry as a whole in 2014 and that total nonresidential construction spending was 6.6% higher than the year prior.
The slightly slower growth in nonresidential construction spending might be attributed to noise in the data and does not seem to be the result of the drop in oil prices over the past several months, as oil-related construction categories like transportation and manufacturing were keeping up their momentum, the economist said.
Federal spending contracted more that anticipated but spending on nonresidential structures is still rising, the economist noted, adding that all indications point to the expansion of nonresidential construction spending, especially private construction spending.
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