Cold, Snowy Weather Drags Down Construction Spending
Recent data gathered by IHS Global Insight found that U.S. construction spending fell 2.5% in December 2010. Bad weather played a role in keeping the number down. Last December was one of the coldest Decembers on record in the South, one of the wettest in the West and one of the snowiest in the Northeast and Midwest, according to the National Climatic Data Center.
Private nonresidential construction may have hit a bottom in July, but it is too early to make this call. Most nonresidential construction categories are still declining, but this decline is being offset by unsustainable increases in electric power construction. For the 4Q, electric power construction was up a whopping 187% (annual rate), while the remaining categories were down 16% (annual rate). Total nonresidential construction increased 10% (annual rate) during the quarter.
The combination of single- and multifamily construction continues to rest at the bottom, where it has been since mid 2009. These categories are expected to improve this year, as the economy adds jobs and continues to grow.
The components that make up infrastructure spending slipped for the second straight month - but because of bad weather, one should not read too much into these declines.
For the year, total construction declined 10.4%. Nonresidential construction (down 23.5%) dropped the most, followed by public construction (down 2.9%) and residential construction (down 1.5%).