Residential growth drives US construction

Construction output in the US was up +7.9% in the 12 months to the end of February, according to data from the US Census Bureau. The rise to an annual output of US$ 885 billion was driven by a +19.2% rise in residential building, which stood at US$ 310 billion for the rolling 12 months to February.

In contrast to the sharp rise in residential construction, the non-residential sector was up just +2.6% compared to a year ago. There were strong rises in the lodging and office sectors, among others, but significant falls in construction linked to public safety, amusement and recreation and the sewage & waste disposal segments.

However, the rise in residential construction , which is dominated by the private sector, meant private construction as a whole was up +12.6% compared to a year ago, to US$ 613 billion.

Conversely, publicly funded construction fell -1.5% to US$ 272 billion in the 12 months to February. The steepest drops were seen in the office, public safety and sewage & waste disposal sectors. However, there were gains for construction linked to transportation and power, and to a lesser extent, highway & street construction , water supply and conservation.

February’s rise was greeted with enthusiasm by the US construction fraternity. Ken Simonson, chief economist of the Associated General Contractors of America (AGC) said, “There are increasing signs that 2013 will be a good year for a wide variety of project types.”

He continued, “There is little doubt that construction of new houses and apartments will continue to boom in the next several months, based on data covering recent housing starts and building permits, as well as reports of rising rents occupancy rates and new home sales in many markets. On the non-residential side, there should be a lot of activity involving pipelines, manufacturing, railroads and trucking, and warehouses.”

These sentiments were echoed by construction forecaster IHS Global Insight, which said in a statement, “This was a solid update. The headline gain was solid. All three major categories were up, The residential sector showed signs of strengthening. The public category may have reached the bottom of this cycle.”