Rise in Construction Spending Not Uniform across all Sectors
January 3, 2017 •
The U.S. construction market is clearly one of the major drivers of coatings demand. News reports covering the construction sector generally focus on the macro construction number, which is currently nearly $1.2 trillion; but the Census Bureau published a comprehensive breakdown of the major components of the market, dividing those into residential and nonresidential, as well as private construction spending versus government funded construction.
While private residential is the largest sub-component of overall construction spending (currently ~$470 billion), in aggregate, the non-residential spend is considerably higher ($712 billion). Within the nonresidential sector, the largest components are currently highway construction ($95 billion), the power sector, and education (both approximately $92 billion annually).
Looking at trends within construction shows that while overall construction is up 4.1% year over year in the most recent construction figures (November), there are large variances in how the components fared in the past 12 months, as shown in Figure 1. Residential construction lagged non-residential, rising only 3% in the past year, while on the non-residential side, lodging and office construction were both up over 25% on a year-over-year basis, and highway construction was up over 10%. On the other hand, spending on communications, manufacturing, and sewage/waste disposal were down during the past 12 months. The impact on coatings demand is that certain categories (e.g., traffic marking paints) are likely to have outperformed sectors such as industrial maintenance coatings intended for manufacturing facilities.
Similarly, private construction was up 4.6% in the past 12 months, while public construction was only up 2.6%. This suggests that sales of construction oriented coatings through government procurement channels were likely to have lagged comparable products aimed at private sector customers.
Contact ACA’s Allen Irish for more information.