Construction spending dipped from October to November, but resolution of the uncertainty regarding federal taxes for 2013 should unleash more private construction investment, according to an analysis of new federal data released recently by the Associated General Contractors of America. Association officials warned, however, that unresolved issues about federal construction spending, including storm relief for northeastern states, will hold down public construction spending.

“Preliminary data from the U.S. Census Bureau for November shows overall construction spending slipped 0.3% from October’s total after seven months of steady gains,” said Ken Simonson, the association’s chief economist. “The more significant comparison, however, is with year-ago levels, and the November report shows a respectable 7.7% gain over the past 12 months.”

Simonson noted that private single- and multifamily spending continued growing strongly. Spending on new single-family houses climbed 1.3% for the month and 29% year-over-year, while multifamily spending rose 0.5% and 46%, respectively.

“Private nonresidential construction has been in a holding pattern for the past several months, but the passage of a tax bill should encourage many businesses to go ahead with projects they have held in reserve,” Simonson predicted. “Despite a drop of 0.7% in November, the year-over-year total was up by 8.2%, and this figure appears poised to return to double-digit percentage gains in the next few months.”

Simonson pointed out four categories of private nonresidential construction that posted increases of more than 10% between November 2011 and November 2012, although results for the latest month were mixed. Lodging construction declined 1.3% for the month but jumped 26% over 12 months. Office construction shrank 0.9% from October but grew 17% from November 2012. Private transportation construction, principally by rail and trucking companies, added 3.4% for the month and 16% year-over-year. Power and energy construction, including spending on oil and gas fields and pipelines, contracted 1.4% from October but rose 14% over 12 months.

Simonson observed that public construction spending, which has alternated between monthly increases and decreases in 2012, sank 0.4% in November and 2.6% year-over-year. He said the two biggest categories of public spending both rose for the month but declined from November 2011 levels. Highway and street construction spending was up 0.5% from October but down 6.0% from a year ago, while educational construction spending rose 0.1% for the month but fell 3.4% from year-ago levels.

Stephen Sandherr, CEO for the construction trade association, urged Congress and the administration to make infrastructure investment a top priority in 2013. “Congress and the president have provided some tax certainty that provides a foundation for economic growth. But their jobs are far from completed. It is vital that the states devastated by Hurricane Sandy receive funding immediately for recovery work. In addition, lawmakers should not target construction spending for further cuts when they turn to spending decisions in the next two months.”