Construction Spending Picks Up

(Illustration courtesy of U.S. Department of Commerce; Wells Fargo Economics)

The U.S. Census Bureau estimated December 2023 construction spending increased 0.9% in December to a seasonally adjusted annual rate of $2,096.0 billion.

The December figure is 13.9 % above the December 2022 estimate of $1,840.9 billion, Census said Thursday.

The total value of construction last year was $1,978.7 billion, 7.0% above the $1,848.7 billion spent in 2022, the report said.

Wells Fargo Economics, Charlotte, said construction spending ended 2023 “on a high note” and said spending bested expectations.

“Despite higher interest rates, a structural shortfall of available homes appears to be boosting new single-family and home improvement project spending,” Wells Fargo Economics economists Charlie Dougherty and Patrick Barley said in a commentary.

Looking ahead, expected lower interest rates and economic growth should help bolster construction, Dougherty and Barley said. “Residential spending should continue to lift overall spending as mortgage rates continue to move lower,” the commentary said. “On the other hand, the lagged impact of reduced credit access and higher interest rates has likely yet to be fully realized. A recent downshift in new commercial construction starts and moderating manufacturing spending suggests a weaker pace of nonresidential outlays in coming months.”