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Economy in Brief

U.S. Construction Spending Loses Strength During 2014
by Tom Moeller  February 2, 2015

The value of construction put-in-place increased 6.1% last year following a 5.7% rise in 2013. The rise was led by an improved 11.0% increase in nonresidential building activity followed by an easier 5.1% gain in residential building. Public sector building bounced 1.8% higher after declines in each of the prior four years. Construction activity lost strength, however, by year end as it improved 0.4% in December (2.2% y/y following a 0.2% decline. The rise compared to expectations for a 0.6% increase in the Action Economics Forecast Survey.

The annual gain in nonresidential building activity reflected a strong 18.7% rise in office construction as well as a 14.3% gain in power. For December alone, office building lost no momentum and gained 1.7% (17.6% y/y). Power construction, however, eased as the year progressed and was down 8.3% y/y. That followed gains of one-third earlier in the year. Growth in residential building activity slowed from a 20.4% rise in 2013 and a 14.4% increase in 2012. By yearend, very modest monthly increase left the twelve-month comparison at -4.0%. Much of that deterioration came as spending on improvements was off by roughly one-third y/y by the end of the year. Single-family building still was rising 11.0% y/y in December though that was down from a nearly one-third rise in 2013. Multi-family sector activity gained 11.0% during all of last year but momentum had slowed to 5.3% by year-end.

Public sector construction activity improved last year. Transportation building rose 10.7% y/y as of December and building of highways & streets, which accounts for 30% of all public sector building activity, rose 9.8% y/y. Transportation sector building rose 10.7% y/y by December and 4.5% for the full year.

The construction spending figures are in Haver's USECON database and the expectations figure is contained in the AS1REPNA database.

Construction Put in Place (%) Dec Nov Oct Y/Y 2014 2013 2012
Total 0.4 -0.2 1.4 2.2 6.1 5.7 9.2
  Private 0.1 0.5 0.4 0.4 7.9 10.1 16.0
    Residential 0.3 0.1 0.4 -4.0 5.1 20.4 14.4
    Nonresidential -0.2 0.8 0.4 5.3 11.0 0.6 17.5
  Public 1.1 -1.8 4.1 6.7 1.8 -3.5 -2.8
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