The U.S. Census Bureau’s national Value of New Construction spending data on more than 80 construction sectors offers some good insight into what makes the construction market tick. On some level the various market segments are all inter-related, but many operate independently of each other, too. Some segments race ahead of the overall market because of the demands of the niches they serve, while others, like housing, lead and are linked to other types of construction.
Housing construction is directly linked to many different types of commercial and public building projects. One of the evergreen truisms of construction forecasting is that once new housing is built, strip malls loaded with retail and light commercial construction will follow to fill the needs of new home owners for dining, shopping, entertainment, gas, doctors’ offices and many other services.
The U.S. Census Bureau data also reveals which sectors account for the highest percentage of Total Construction sales and which sectors are outperforming or lagging the market as a whole (see chart linked below). One of the first things that becomes quickly apparent is how relatively few construction sectors account for the majority of total construction spending. At the top level, Private Construction accounted for a whopping 77.4% of total construction spending in April of $1.31 trillion, dwarfing Public Construction, which accounted for 22.6% ($296.12 billion). The other dominant category is private nonresidential construction, which accounted for 35% of all construction back in April with $457.99 billion.
Things get even more interesting when you look at the individual construction sectors within the Private and Public Construction categories and see how a few categories dominate the market. New single-family construction is the largest of all the individual construction niches, with 21.8% of total construction spending, followed by general office construction (4.8%); and new multi-family housing (4.7%). Add in the private manufacturing category (5.1%); private health care spending (2.4%); electric power (5.3%); and public educational spending (5.5%); and we are already up to 49% of total construction spending.
The year-over-year (YOY) Value of New Construction data that Electrical Marketing’s editors published in the chart on the individual market segments is preliminary data for April and should not be used as an indicator for the overall direction of any construction segment. But it’s still interesting to see the dramatic double-digit YOY increases for some construction sectors that have made news over the past year. Airports, warehouses and mass transit projects stand out in the chart.
Electrical Marketing’s database of construction projects shows more than 20 airport projects in various stages of development, and a study by Airports Council International – North America says, “U.S. airports have nearly $100 billion in infrastructure needs during 2017–2021 to accommodate growth in passenger and cargo activity, rehabilitate existing facilities, and support aircraft innovation.”
And it’s no secret that Amazon has been building warehouses like crazy across North America, although the company doesn’t release any actual numbers. MWPVL International, a supply chain and logistics consulting firm, estimates that Amazon now operates 331 fulfillment centers and other warehouse and sortation centers with a total of 122.1 million sq ft. MWPVL’s website says Amazon plans to build 37 more of its massive distribution facilities.