Good News for the Construction Sector: Spending Is Up
The Commerce Department earlier this month released its report on construction spending for the month of July, citing that gains have increased to their highest level in four years. Outlays climbed 0.6 percent to a $900.8 billion annual rate, the most since June 2009, according to Commerce Department figures.
Spending rose 5.2% in the 12 months ended in July after adjusting for seasonal variations. July residential construction rose at a 12.9% annual rate, while public project outlays dipped 0.3%. Federal spending rose 1.1%, the biggest increase since October, while state and local construction projects fell 0.4%.
In looking more closely to the numbers, the advance in housing activity pushed residential construction to its highest level since September 2008. The increase for nonresidential building was led by a 6.1% increase in construction of hotels and motels. Office building and the category that covers shopping centers also showed gains.
Economists at JPMorgan expect that housing will keep improving with construction this year hitting 925,000 homes and apartments, up 18% from 2012. The forecast is for a further increase to a level of 1.13 million homes and apartments in 2014.
This is all good news for the construction sector, which was hit hard after the housing collapse and record foreclosures. Also, set to benefit from this upswing in construction spending is the transportation industry. There will be increased demand for trucking services due to spending increases in the number of shipments of goods and building materials.
Caitlin-Morgan is well positioned to provide the insurance and surety bonds needed to meet the rise in construction spending and projects. We can provide your clients with Performance and Bid Bonds, License & Permit Bonds, among other bonding requirements, as well as Workers Compensation solutions. We can also help you with securing transportation insurance for clients in this sector. Just give us a call at 877.226.1027.
Sources: Bloomberg, USA Today, Commerce Department, Transport Topics