Dive Brief:
- Construction spending fell 1.0% in January to a seasonally adjusted annual rate of $1.180 trillion, below the revised rate of $1.192 trillion in December, the Commerce Department reported Wednesday.
- Private residential construction grew 0.5% in January, while private nonresidential construction remained nearly identical to December's figures. Within residential, single-family rose 2.3%, while multifamily spiked 9.0%. Public construction dropped 5.0% between December and January.
- January's construction spending figure came in 3.1% above the January 2016 mark.
Dive Insight:
January's figures follow a slowdown in December's spending that put the brakes on a previous post-recession high. While January's report reveals a second-straight month of declines in spending, analysts have forecast spending growth in the coming year.
Month-to-month spending figures remain volatile as a persistent labor shortage and strict regulatory climate continue to undermine new construction activity. Still, economists at Dodge Data & Analytics have predicted an increase in starts for 2017 that could total up to $712.9 billion for the industry. Despite falling back 2.6% in January, the month's housing starts still came in 10.5% ahead of the year-ago mark, and a rise in January's building permit authorizations bodes well for building activity down the line.
On the infrastructure side, industry observers have pinned their confidence in future prospects for construction growth, in part, on the Trump administration's $1 trillion infrastructure plan and the construction of the U.S.-Mexico border wall. While funding for both proposals remains hamstrung in Congress, builders are optimistic about the potential for business growth and a much-needed injection of federal funding back into the industry. This week, U.S. Customs and Border Protection officials opened up the bidding process for the border wall, giving companies from March 6 to March 10 to submit their designs for the project.
