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 | Dec 19, 2018
Run of positive billings continues at architecture firms
November marked the fourteenth consecutive month of increasing demand for architectural firm services.
Market Data | Dec 5, 2018
ABC predicts construction sector will remain strong in 2019
Job growth, high backlog and healthy infrastructure investment all spell good news for the industry.
Market Data | Dec 4, 2018
Nonresidential spending rises modestly in October
Thirteen out of 16 subsectors are associated with year-over-year increases.
Market Data | Nov 20, 2018
Construction employment rises from October 2017 to October 2018 in 44 states and D.C.
Texas has biggest annual job increase while New Jersey continues losses; Iowa, Florida and California have largest one-month gains as Mississippi and Louisiana trail.
Market Data | Nov 15, 2018
Architecture firm billings continue to slow, but remain positive in October
Southern region reports decline in billings for the first time since June 2012.
Market Data | Nov 14, 2018
A new Joint Center report finds aging Americans less prepared to afford housing
The study foresees a significant segment of seniors struggling to buy or rent on their own or with other people.
Market Data | Nov 12, 2018
Leading hotel markets in the U.S. construction pipeline
Projects already under construction and those scheduled to start construction in the next 12 months, combined, have a total of 3,782 projects/213,798 rooms and are at cyclical highs.
Market Data | Nov 6, 2018
Unflagging national office market enjoys economic tailwinds
Stable vacancy helped push asking rents 4% higher in third quarter.
Market Data | Nov 2, 2018
Nonresidential spending retains momentum in September, up 8.9% year over year
Total nonresidential spending stood at $767.1 billion on a seasonally adjusted, annualized rate in September.
Market Data | Oct 30, 2018
Construction projects planned and ongoing by world’s megacities valued at $4.2trn
The report states that Dubai tops the list with total project values amounting to US$374.2bn.