U.S. Construction Spending Surges
Investments in public projects in the U.S. increased in January and could boost economic growth in the first quarter. Investment in public construction increased by 4.9 percent in January, reaching its highest level since September 2010. This is the largest percentage increase since March 2004.
Spending Increases Across The Board
Investment in federal government construction projects also increased. It rose by 4.2 percent to the highest level since October 2017. State and local government construction spending grew by 4.9 percent.
Private construction project spending increased by 0.2 percent after declining for two months. The housing market has been affected by expensive building materials, higher mortgage rates, and labor shortages.
Increased Spending On Construction Has A Knock-On Effect
Increased spending on construction projects is good news for material suppliers. Basic materials such as cement, concrete, and steel are in demand and retail sales of glass, paint, and hardware increased.
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In February 2019, construction industry leaders remained confident about non-residential construction prospects, according to the Construction Confidence Index.
Contractor confidence remains high, despite ongoing obstacles including growing gaps in hiring pools, which has made it difficult to deliver projects on time and on budget. Slower growth in material prices comparative to last year is likely to be encouraging some of the increased confidence.
Economy Off To A Good Start
Despite the fact that the global economy is slowing, labor shortages are growing, residential construction is soft, and the first quarter growth is fairly lackluster, the overall U.S. economy got off to a good start in 2019.
Economic growth is being fueled by factors such as a surprising growth in exports, state and local government spending, and personal consumption expenditure.
There seems to be enough momentum to carry the economy through the year and any fears of a near-term recession have been halted so far.
The Federal Reserve officials have indicated that interest rates won’t be raised again in 2019, which is good news when it comes to the demand for construction services.