December Construction Spending Up; Caps Best Year Since 1996

WASHINGTON D.C. - Construction spending rose by 1.1 percent in December, capping a year in which building activity posted the best performance since 1996.

The Commerce Department reported Tuesday that last month's increase, the best showing in eight months, followed a 0.3 percent advance in November and reflected widespread strength in both private and public building projects.

For the year, building activity rose nine percent to $998.4 billion. It was the strongest increase since a 10.4 percent jump in 1996.

?EUR??,,????'??These numbers mark a real turnaround for nonresidential construction and show good acceleration at yearend,?EUR??,,????'?? said Kenneth D. Simonson, chief economist for the Associated General Contractors of America. ?EUR??,,????'??After falling for three years, private nonresidential construction wound up four percent higher than in the previous year, with December's total a solid six percent higher than in December 2003. Public construction was three percent higher for the full year and nine percent ahead in December.?EUR??,,????'??

Simonson noted that part of the gain was due to steep price increases for many construction materials.

?EUR??,,????'??In 2005, I expect prices to rise less dramatically, and for more construction categories to keep expanding in inflation-adjusted terms. ?EUR??,,????'?? he said. ?EUR??,,????'??However, it is essential that Congress approve an adequate level of highway spending on a long-term basis, or this important sector will slip badly by 2006.?EUR??,,????'??

Private Construction

Spending on private construction was at a seasonally adjusted rate of $789 billion, 0.9 percent above the revised November estimate of $782.3 billion. Residential construction was at a seasonally adjusted annual rate of $559.8 billion in December, 0.7 percent above the revised November estimate of $555.8 billion. Nonresidential construction was at a seasonally adjusted annual rate of $229.2 billion in December, 1.2 percent above the revised November estimate of $226.5 billion.

The value of private construction in 2004 was $764,9 billion, 10.9 percent above the $690 billion total in 2003. Residential construction in 2004 was $542.7 billion, 14 percent above the 2003 figure of $476.1 billion and nonresidential construction was $222.2 billion, 3.9 percent above the 2003 total of $213.9 billion.

Public Construction

In December, the estimated seasonally adjusted annual rate of public construction spending was $242.8 billion, 1.8 percent above the revised November estimate of $238.4 billion. Educational construction was at a seasonally adjusted annual rate of $66.2 billion, 1.7 percent above the revised November estimate of $65.1 billion. Highway construction was at a seasonally adjusted annual rate of $68.1 billion, 3.2 percent above the revised November estimate of $66 billion.

The value of public construction in 2004 was $233.5 billion, 3.4 percent above $225.7 billion in 2003. Education construction in 2004 was $63.1 billion, 3.8 percent above the $60.8 billion in 2003 and highway construction was $65 billion, 3.7 percent above the $62.7 billion in 2003.