Construction spending hits 17-month high in November

Construction spending totaled $807 billion in November 2011, the highest level since June 2010, as homebuilding, private nonresidential construction and public construction all increased compared to October, the Associated General Contractors of America reported today in an analysis of new Census Bureau data. Association officials cautioned, however, that public spending will drop even further in 2012 because of delays in enacting needed infrastructure bills and planned cuts to many federal construction programs.

“Several segments of construction appear to be climbing out of a hole,” said the association’s chief economist, Ken Simonson. “The new year should reinforce recent year-over-year gains in apartment, power, manufacturing and private transportation construction. But November’s upturns in single-family homebuilding and public construction may not be sustainable.”

Simonson noted that total construction spending rose 1.2 percent in November from October and 0.5 percent from the November 2010 level. Private residential construction posted increases of 2.0 percent and 3.4 percent, with gains in single-family, multifamily and residential improvements. Private nonresidential construction spending inched up a negligible amount from October but gained 4.5 percent compared to November 2010. Public spending rose 1.7 percent last month but declined 5.3 percent from a year earlier.

The construction economist added that the uptick in private nonresidential construction from November 2010 was widespread, led by manufacturing, up 12.6 percent; commercial (retail, warehouse and farm), up 12.0 percent; private educational, up 10.0 percent; private transportation, up 9.2 percent; and power (including oil and gas), up 8.4 percent.

Most public construction categories shrank over the past 12 months, although the two largest had mixed results, Simonson observed. Highway spending increased for the sixth straight month, by 1.9 percent, but was 2.2 percent below the November 2010 mark. Public educational construction was up 0.5 percent for the month and 2.8 percent year-over-year. “Public construction segments face stiff spending cuts in 2012,” Simonson cautioned.

Association leaders said planned cuts to a range of federal building and infrastructure construction programs were likely to hurt the construction industry even as private sector demand finally rebounds. They noted that the federal budget for 2012 includes a more than 6 percent cut for construction programs and added that Congress is years late in passing much-needed water, aviation and surface transportation legislation.

Survey Finds Construction Firms Plan to Hire in 2011

According to an industry-wide survey by the Associated General Contractors of America and Navigant, more construction firms will be hiring workers in 2011 than laying them off. The survey, conducted as part of the Construction Industry Hiring and Business Outlook, shows the industry may finally be emerging from a severe downturn that has left millions of skilled workers unemployed.

The survey reports that 27 percent of construction firms say that they plan to add staff in 2011, while only 20 percent plan layoffs. In 2010, 55% of construction firms laid off employees, while only 20% added them. Expanding firms plan to hire an average of 23 employees, while contracting firms plan to lay off an average of only 16 employees. Firms in Iowa are the most optimistic, with 45% planning to hire, while Idaho is the most pessimistic. There, 48% of the firms are planning cutbacks.

Among the 26 states with large enough survey sample sizes, 45 percent of firms in Iowa plan to hire, more than in any other state. Those firms plan to hire an average of 5 employees each, 21 percent of their workforce. Only five percent of Iowa firms plan layoffs. Meanwhile, 48 percent of firms in Idaho plan layoffs for this year, the highest percentage of any state. Those firms plan to lay off an average of 12 employees each, 11 percent of their workforce. Only 14 percent of Idaho firms plan to hire.

View the 2011 Construction Hiring and Business Outlook report.

View the survey results.