US construction expenditures have increased steadily over the past few months despite a decline in the number of public projects. On the other hand, the country's government is doing everything in its power to support building firms to assist them in maintaining the survival of the economy.
Increasing Construction Spending
On Tuesday, Jan. 2, the Department of Commerce reported that expenditures on construction had grown by 0.4%. A revision was made to the data for October, which showed that construction spending increased by 1.2% rather than the 0.6% reported previously. In a survey, economists projected a 0.6% increase in construction expenditures.
As a result of rising mortgage rates, there was an increase in the number of residential homes built in the United States in November, contributing to the overall rise in construction spending.
Following 11 consecutive months of rising expenditures on materials, labor, engineering, and other construction-related expenses, the Census Bureau announced that the total amount spent on construction in November grew by 0.4% compared to the total amount spent in October.
Spending on the building has also grown by 11.3% compared to the data as of November 2022. Compared to the same 11-month period in 2022, the number of dollars spent on building in 2023 was 6.2% greater year-to-date.
As per The Construction Association, November construction expenditures, unadjusted for inflation, amounted to $2.050 trillion annually. This value is 0.4% greater than the revised October rate that was increased. Accordingly, the amount spent on private residential construction increased by 1.1 percent, while the amount spent on single-family construction increased by 2.9 percent for the seventh consecutive month. Thus, there was a slight increase of 0.1 percent in spending on multifamily developments.
The amount of money spent on private nonresidential buildings increased by 0.2 percent in November, marking the fifth consecutive month this trend occurred. Manufacturing construction, the most critical sector, experienced a growth of 0.5 percent. Commercial construction projects, which include retail, agricultural, and warehouse construction, experienced a decrease of 0.5 percent, while investments in power, oil, and gas projects experienced an increase of 0.8 percent. In addition, other significant private categories also experienced a loss. The amount spent on private healthcare facilities and expenses related to offices and data centers remained highly stable.
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US Boosts Construction Factories
At a time when there is a severe lack of previously owned homes available on the market, the new single-family housing segment is providing the foundation for construction activity. Manufacturing of semiconductors is being brought back to the United States as part of a program implemented by the administration of President Joe Biden. This move also contributes to the development of factories, helping keep the economy afloat.
According to Christopher Rupkey, chief economist at FWDBONDS in New York, one of the reasons why the Federal Reserve has not driven the economy to its knees as the economic models from prior business cycles had predicted is because of the activity in the construction industry.
He noted that funds are available for new industrial construction projects; the only downside is a severe shortage of construction laborers nationwide.
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