Construction Spending in U.S. Rose in December
December 2011 saw overall spending on construction in the U.S. jump at 1.5 percent over the annual rate projected in November, according to Census Bureau data released Wednesday. The estimate had been $804 billion, and was increased with the December report to $816.4 billion, seasonally adjusted. This is 4.3 percent above the December 2010 estimate of $782.9 billion.
Private construction spending was $529.7 billion, which was 2.1 percent higher than the November estimate of $518.8 billion, out of which $241.2 billion was for residential construction. This component increased 0.8 percent above the revised estimate, but nonresidential construction at $288.5 billion, increased at 3.3 percent. The value of residential construction in 2011 was $236.2 billion, which was below the amount spent on it, but the value of nonresidential was 2.4 percent higher than spending; this difference represents the still weak housing market, and excess supply in foreclosure properties.
Public construction followed the same basic pattern, but budget deficit problems are implied as well. The December estimated annual rate of overall public construction rose by 0.5 percent to $286.6 billion, over the November projection of $285.3 billion. Educational construction estimates dropped 0.6 percent in December to $70.6 billion, perhaps reflecting budgetary shortfalls in some states. Highway construction increased by 1.8 percent, to $84.5 billion.
All in all, the increases are good news for the economy, as construction spending is a large part of GDP; separate reports are estimating that this trend picked up significantly in January, as well. Construction jobs generally pay well, and incomes in the proximities are enhanced by the multiplier effects. Higher incomes reinforce economic recoveries, leading to more construction and consumer spending.
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