Construction spending in May reached the highest level since December 2009, as widespread gains in private nonresidential, single-family and multifamily construction more than offset a continuing downturn in public construction, according to an analysis of new federal data released by the Associated General Contractors of America.
Residential construction surged 3% in May and registered an 8% year-over-year increase, with new multifamily construction leaping 6% and 50%, respectively, and single-family home building up 2% and 15% for the same periods.
‘It is encouraging to see such a broad-based pickup in private construction,’ says Ken Simonson, the association's chief economist, who adds that private nonresidential spending climbed for the third month in a row and was 19% higher than in May 2011.
Four private-sector nonresidential categories each posted 12-month spending increases of more than 25%: power and energy construction (35%), hotels (29%), and educational and manufacturing (27% apiece). In contrast, public construction slumped for the fifth consecutive month, falling 4% below the May 2011 level.
‘Based on the number and variety of projects that have been announced in recent months, I expect the private nonresidential sector to keep posting hefty gains for the rest of 2012 and beyond,’ Simonson predicts. ‘Apartment construction seems sure to remain strong as well. Single-family home building is not as solid but has apparently passed its low point. Together, these categories should mean that total construction spending in 2012 will be positive for the year for the first time since 2007 despite ongoing weakness in public construction.’