Construction spending declined for the fourth consecutive month in June as decreases in single-family, highway and educational projects outweighed increases in several private nonresidential categories, according to an analysis by the Associated General Contractors of America of government data released today. As state and local government face budget deficits, association officials cautioned that investments in infrastructure and other construction projects are likely to continue falling unless Congress and the Trump administration provide additional, targeted and dedicated infrastructure funding.
“Regrettably, the overall downward trend in spending is likely to continue and to spread to more project types as work that began before the pandemic hit finishes up,” said Ken Simonson, the association’s chief economist. “Unless the federal government invests heavily—and promptly—in infrastructure projects, both public and private nonresidential investment are likely to shrink further.”
Construction spending in June totaled $1.36 trillion at a seasonally adjusted annual rate, a decline of 0.7% from May and the lowest total in a year. After reaching a record high in February of $1.44 trillion, total spending has slumped by 6.0%, the steepest four-month contraction in a decade, the economist noted.
Public construction spending decreased by 0.7% in June, dragged down by a 1.7% drop in highway and street construction spending and a 2.7% decline in educational construction spending, the two largest public segments. The next-largest segment, transportation facilities, also contracted, by 0.6%.
Private nonresidential construction spending inched up 0.2% from May to June, led by a gain of 0.7% in the largest segment, power construction. Among other large private spending categories, commercial construction—comprising retail, warehouse and farm structures—slumped 1.3%, while manufacturing construction rose 1.7% and office construction edged up 0.3%.
Private residential construction spending shrank by 1.5% in June as spending on single-family homebuilding plunged 3.6% to its lowest level since late 2016. In contrast, new multifamily construction spending climbed for the third month in a row, posting a 3.0% increase from May.
Association officials said that state and local budgets are getting hammered by declining economic activity related to the ongoing pandemic. They urged Congress and the administration to quickly pass new infrastructure and recovery measures to help reverse the declines in public spending. They added that those new investments would help put many people back to work in good-paying construction careers.
“It will be hard to rebuild the economy if state and local governments lack the resources needed to improve roads, retrofit schools and keep drinking water safe,” said Stephen E. Sandherr, the association’s chief executive officer. “Instead of letting people languish in unemployment, Washington can put people back to work simply by boosting investments in needed infrastructure and other construction projects.”
Related Stories
Market Data | Apr 28, 2021
Construction employment declines in 203 metro areas from March 2020 to March 2021
The decline occurs despite homebuilding boom and improving economy.
Market Data | Apr 20, 2021
The pandemic moves subs and vendors closer to technology
Consigli’s latest market outlook identifies building products that are high risk for future price increases.
Market Data | Apr 20, 2021
Demand for design services continues to rapidly escalate
AIA’s ABI score for March rose to 55.6 compared to 53.3 in February.
Market Data | Apr 16, 2021
Construction employment in March trails March 2020 mark in 35 states
Nonresidential projects lag despite hot homebuilding market.
Market Data | Apr 13, 2021
ABC’s Construction Backlog slips in March; Contractor optimism continues to improve
The Construction Backlog Indicator fell to 7.8 months in March.
Market Data | Apr 9, 2021
Record jump in materials prices and supply chain distributions threaten construction firms' ability to complete vital nonresidential projects
A government index that measures the selling price for goods used construction jumped 3.5% from February to March.
Contractors | Apr 9, 2021
Construction bidding activity ticks up in February
The Blue Book Network's Velocity Index measures month-to-month changes in bidding activity among construction firms across five building sectors and in all 50 states.
Industry Research | Apr 9, 2021
BD+C exclusive research: What building owners want from AEC firms
BD+C’s first-ever owners’ survey finds them focused on improving buildings’ performance for higher investment returns.
Market Data | Apr 7, 2021
Construction employment drops in 236 metro areas between February 2020 and February 2021
Houston-The Woodlands-Sugar Land and Odessa, Texas have worst 12-month employment losses.
Market Data | Apr 2, 2021
Nonresidential construction spending down 1.3% in February, says ABC
On a monthly basis, spending was down in 13 of 16 nonresidential subcategories.