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Construction Health Update: Construction Spending Takes a Hit in January


As of Monday, March 6, our national Construction Health Indicator score 79.9.

Industry performance results are in for the month of January and to the shock of many, builders cut on construction spending by one percent – the largest amount in nine months. Meanwhile, January also saw a one percent increase in construction input prices.


According to the Commerce Department, construction spending fell one percent in January.

Amidst a climate of healthy construction stock prices – which are based on the promise of future investments in government infrastructure over the next decade – actual government spending tumbled by five percent to kick off 2017. This is the largest one-month drop in government construction spending since March 2002.

The overall decrease in government spending pushed total activity down to a seasonally adjusted rate of $268.7 billion.

  • Federal spending on construction projects declined 7.4 percent.
  • State and local  spending on construction projects declined 4.8 percent.

Procore’s Chief Economist, Anirban Basu, says that although this is a shock to many, it should not be a huge reason for concern just yet. Total activity is still at an annual rate of $1.18 trillion, a pace that is 3.1 percent higher than one year ago.

Economic growth in the construction industry will also continue to be supported by the continued strength of a healthy housing market. Especially, going into the spring season when housing permits across the country have increased at an average of 5.6 percent nationally.

Commodities and Materials

Pricing pressures changed little since last week’s construction health report. Construction input prices collectively rose by 1 percent on a monthly basis and 3.8 percent on a year-over-year basis. Meanwhile, selling prices have remained the same and indicate a tightening of margins across all market sectors in the months ahead.

Increases in natural gas prices are largely to blame as they have expanded 23.6 percent for the month and are up 81.8 percent year over year. Crude petroleum prices also slipped 5.5 percent for the month, but are up 77.5 percent for the year.

Meanwhile, restrictions on the use of imported materials continues to drive up the cost of the following materials:  


Construction employment totaled 6,809,000 in January, an increase of 36,000 from the upwardly revised December total and an increase of 170,000 or 2.6 percent from a year ago.

Average hourly earnings increased by 3.2 percent over the past year

At $28.52 per hour, construction wages owns the fastest rate of wage increase over all private sector workers.

Alaska recorded the highest weekly earnings, with $1,343 earned on average

In a survey that the Associated General Contractors released in January, 73 percent of the 1,281 participating contractors said they planned to add to their headcount in 2017. But an equally high percentage said they were having trouble filling hourly or salaried positions.

Since end-of-month openings in construction have been at 17-year highs, according to recent government data, hiring managers should focus on increasing the efficiency of their new hires. Not on increasing salaries to attract new talent.

That’s all we have for now. Keep building and we’ll keep crunching the numbers. Check back here daily as numbers refresh and we’ll continue to translate this into meaningful digests that will help you make informed decisions all week long.

For industry highlights by region, check out the top contractors, the biggest news stories, plus statistics on the labor market that may surprise you on this page. Or click here for recaps from Construction Health Updates from past weeks.

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