North Carolina Construction Report staff writer
Before the COVID-19 crisis tore into the economy later in the winter, spending on U.S. construction projects rose to an all-time high in January, helped by strong gains for home construction and government building projects.
The Commerce Department in mid-March that construction spending increased 1.8% in January, the strongest monthly rise in nearly two years, pushing totally spending to a record seasonally adjusted annual rate of $1.37 trillion.
Spending on home construction jumped 2.1%, the strongest gain since August. The strength came from single-family home construction which rose 2.7% while apartment building was unchanged.
Home building has been seeing strong gains since the summer as falling mortgage rates have helped to spur a rebound after more than a year of lagging activity.
Nonresidential construction was up 0.8% in January with spending in the category that includes shopping centers and religious centers showing some of the biggest gains.
Spending on government building projects 2.6% with spending by state and local governments rising 2% to an all-time high while spending by the federal government was up 9.9% to the highest level since May 2012.
After six quarters of declining activity in housing, residential construction has grown at solid rates for the past two quarters with economists expecting that growth to continue this year.
The overall economy grew at a moderate 2.1% annual rate in the final three months of last year but analysts are concerned that the spreading coronavirus will depress U.S. growth because of disruptions to supply chains, cancellations of public events and even more drastic “social distancing” and stay-in-place requirements.
Federal Reserve Chairman Jerome Powell said in a statement that the Fed would be prepared to act to support economic growth if needed. The stock market has suffered its worst week since the 2008 financial crisis as fears rose about how bad the economic hit will be from the virus.