Construction spending increased by 1.4% in August as strong gains in residential construction outweighed decreases in most private nonresidential segments and many public categories, according to an analysis by the Associated General Contractors of America of government data released today. Association officials cautioned that nonresidential construction demand will likely continue to stagnate without new federal measures to offset the economic impacts from the coronavirus.
“The August spending report shows a stark divide between housing and nonresidential markets that appears likely to widen over the coming months,” said Ken Simonson, the association’s chief economist. “With steadily rising business closures and worker layoffs, and growing budget gaps for state and local governments, project cancellations are likely to mount and new starts will dwindle.”
Construction spending in August totaled $1.41 trillion at a seasonally adjusted annual rate, an increase of 1.4% from July’s upwardly revised total. Residential spending jumped by 3.7%, while private and public nonresidential spending inched down by a combined 0.1%.
Private nonresidential construction spending contracted by 0.3% from July to August, with decreases in nine out of 11 categories. The two largest private nonresidential segments, power construction and commercial construction—comprising retail, warehouse and farm structures—each shrank by 1.1%. Among other large segments, manufacturing construction rose 2.2% and office construction slipped 0.3%.
Public construction spending edged up 0.1% in August but eight of 13 categories declined. Despite the increase in August, public construction spending has trended down by 2.5% from its high point in March.
Private residential construction spending increased by 3.7% in August, powered by a 5.5% jump in single-family homebuilding and a 3.0% gain in residential improvements. In contrast, new multifamily construction spending dipped by 0.1% from July.
Association officials noted that demand for nonresidential construction was being impacted by broader economic challenges brought about by the coronavirus. These challenges are impacting demand for many commercial projects while also impacting state and local construction budgets. The construction officials urged Congress and the White House to work together to enact new recovery measures to help boost economic activity and demand for construction.
“One of the biggest challenges facing the construction industry is the lack of demand for many new types of commercial and local infrastructure projects, especially after the current crop of projects is completed,” said Stephen E. Sandherr, the association’s chief executive officer. “Washington officials can give a needed boost to construction demand and employment by boosting infrastructure and putting in place liability protections for firms that are protecting workers from the coronavirus.”
Related Stories
Market Data | Apr 29, 2019
U.S. economic growth crosses 3% threshold to begin the year
Growth was fueled by myriad factors, including personal consumption expenditures, private inventory investment, surprisingly rapid growth in exports, state and local government spending and intellectual property.
Market Data | Apr 18, 2019
ABC report: 'Confidence seems to be making a comeback in America'
The Construction Confidence Index remained strong in February, according to the Associated Builders and Contractors.
Market Data | Apr 16, 2019
ABC’s Construction Backlog Indicator rebounds in February
ABC's Construction Backlog Indicator expanded to 8.8 months in February 2019.
Market Data | Apr 8, 2019
Engineering, construction spending to rise 3% in 2019: FMI outlook
Top-performing segments forecast in 2019 include transportation, public safety, and education.
Market Data | Apr 1, 2019
Nonresidential spending expands again in February
Private nonresidential spending fell 0.5% for the month and is only up 0.1% on a year-over-year basis.
Market Data | Mar 22, 2019
Construction contractors regain confidence in January 2019
Expectations for sales during the coming six-month period remained especially upbeat in January.
Market Data | Mar 21, 2019
Billings moderate in February following robust New Year
AIA’s Architecture Billings Index (ABI) score for February was 50.3, down from 55.3 in January.
Market Data | Mar 19, 2019
ABC’s Construction Backlog Indicator declines sharply in January 2019
The Construction Backlog Indicator contracted to 8.1 months during January 2019.
Market Data | Mar 15, 2019
2019 starts off with expansion in nonresidential spending
At a seasonally adjusted annualized rate, nonresidential spending totaled $762.5 billion for the month.
Market Data | Mar 14, 2019
Construction input prices rise for first time since October
Of the 11 construction subcategories, seven experienced price declines for the month.