If major economic indicators are correct, the construction industry is as solid as a steel beam. After construction spending reached a new high in December, all signs point to a huge 2018 for contractors.
“If long-awaited progress is made on infrastructure spending, the construction recovery will likely transition from solid to spectacular,” said Associated Builders and Contractors, Inc. Chief Economist Anirban Basu.
What is Construction Spending?
Construction spending is an economic indicator that measures the amount of money spent on new construction. It is released monthly by the U.S. Department of Commerce’s Census Bureau. This economic indicator examines both residential and non-residential construction in the private and public sectors.
Construction Spending by the Numbers
As the national economy gains momentum, many American contractors are already reaping the benefits.
- Construction spending grew 3.8 percent for all of 2017, reaching $1.23 trillion.
- This is the sixth consecutive annual increase.
- Industry spending rose 0.7 percent in December, the fifth monthly gain in a row, according to the U.S. Commerce Department.
- Non-residential spending expanded 0.1 percent year-over-year to its highest level since March 2017.
- Private residential spending jumped 6.2 percent last year to a seasonally adjusted annual rate of $526 billion, the highest level since March 2007, according to a National Association of Home Builders’ analysis.
Public Construction Stagnates
Although the number of private construction projects has steadily increased, spending on public construction fell 2.5 percent in 2017.
The Association of General Contractors recently called on federal, state and local officials to boost funding and shorten the review process for approving new infrastructure projects.
“It is essential to increase the nation’s investment in roads and other transportation facilities to keep the economy growing,” said Stephen E. Sandherr, the association’s chief executive officer. “And investment in safer highways, drinking water and wastewater systems are important for public safety and health.”
If the government approves more public sector infrastructure projects in the New Year, 2018 will be a big year for construction contractors.