Total U.S. construction spending continued to perform well in December 2019, especially in the state and local sector. Census Bureau non-seasonally adjusted (NSA), constant dollar CPIP data showed that December’s twelve month total, (12MT) construction expenditures grew by 5.7% year on year (y/y), to $1371.2 billion (B). On a 12MT basis, private expenditures advanced 4.5% y/y, while, State & Local advanced by 9.5% y/y. Non-residential 12MT CPIP decreased by 6.6%, 12MT y/y to $534.6B.

Total Construction:

Figure 1 presents CPIP data for total construction for both 3 moving total and 12 month moving total y/y metrics. Momentum, defined as 3MT minus 12MT is also shown. Momentum provides market direction with green indicating stronger activity and red indicating slowing activity. Private construction accounted for 76% of the total three months expenditures ending in December. State & local spending accounted for 22.4%, the remaining 1.6% was for federally financed projects. The private sector posted 21.6% and 4.5% growth for 3MT and 12MT y/y comparisons resulting in a positive 17.1% momentum for the month of April.

Single-family residential construction recorded 67.2% increase on a 3MT basis and 11.9% growth on a 12MT basis. On a 3MT basis, State and Local total construction recorded a 9.8% increase in spending.

Non-residential Construction:

Figure 2 shows the breakdown of non-residential construction (NRC). The overall growth rate was -34.1% on a 3MT y/y and 6.6% decrease on a 12MT y/y basis resulting in a downward 27.5% momentum.

The growth rate of private NRC was -50.1% for the 3MT, and the rolling 12MT value was -12.4%, leading to a momentum score of 37.6%. State and local expenditures were positive for both 3MT and 12MT metrics.

Economists from the BDC Network comment on the construction segment in 2019, “Given the ongoing shortage of available, skilled construction workers, that is likely to continue into 2019. However, materials price dynamics could be far different given a slowing global economy and expectations for a strong U.S. dollar next year.”

At Gerdau we monitor the CPIP numbers every month to keep you, our customers informed on the health of the U.S. construction market.