National nonresidential construction spending fell 1.8% in February, but is up 2.5% compared to the same time last year, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, spending totaled $795.1 billion for the month.
Private nonresidential spending declined 2% on a monthly basis and is down 0.7% compared to February 2019. Public nonresidential construction spending was down 1.5% for the month, but is up 7.2% on a year-over-year basis.
“Data characterizing the economy prior to the coronavirus outbreak continues to trickle in,” said ABC Chief Economist Anirban Basu. “While nonresidential construction spending declined in February, according to today’s data release, the decline was modest and overall performance was not substantially different from prior months.
“However, with communities in Massachusetts, Pennsylvania, California and elsewhere recently shutting down certain construction projects in an effort to better support social distancing and with economic activity generally grinding toward a halt, the construction spending data will undoubtedly deteriorate further and faster during the months to come,” said Basu. “Unfortunately, that is not where the pain will end. Once the crisis is over, hotel chains will be weaker financially, more storefronts will be empty and fewer employers will be interested in relocating to high-end office space, which will result in diminished demand for nonresidential construction services even after the broader economy comes back to life.
“Typically, nonresidential construction holds up better during the early stages of a downturn as contractors continue to work through their collective backlog, which stood at 8.9 months in January 2020, according to ABC’s Construction Backlog Indicator,” said Basu. “That may still be the case, but, given growing liquidity and solvency problems spreading through the economy, it is quite likely that many construction projects presently on the drawing board will be postponed or canceled. Backlog may disappear quickly as project owners resort to the use of force majeure clauses or other mechanisms to back out of contractual obligations. Time will tell, and eventually the extent to which projects are delayed will be reflected in the construction spending data.”
Related Stories
Market Data | May 12, 2020
ABC’s Construction Backlog Indicator falls in April; Contractor Confidence rebounds from historic lows
Nonresidential construction backlog is down 0.4 months compared to the March 2020 ABC survey and 1.7 months from April 2019.
Market Data | May 12, 2020
6 must reads for the AEC industry today: May 12, 2020
A 13-point plan to reduce coronavirus deaths in nursing homes and Bjarke Ingels discusses building on Mars.
Market Data | May 11, 2020
Interest in eSports is booming amid COVID-19
The industry has proved largely immune to the COVID-19 pandemic due to its prompt transition into online formats and sudden spike in interest from traditional sports organizations.
Market Data | May 11, 2020
6 must reads for the AEC industry today: May 11, 2020
Nashville residential tower will rise 416 feet and the construction industry loses 975,000 jobs.
Market Data | May 8, 2020
Construction industry loses 975,000 jobs in April as new association survey shows deteriorating demand for construction projects
Association partner Procore also releases near real-time construction data measuring impacts of coronavirus as association calls for new measures.
Market Data | May 8, 2020
7 must reads for the AEC industry today: May 8, 2020
The death of the office and Colorado's first multifamily project to receive WELL Precertification.
Market Data | May 7, 2020
5 must reads for the AEC industry today: May 7, 2020
5 memory care communities with a strong sense of mission and making jobsites safer in the COVID-19 world.
Market Data | May 6, 2020
6 must reads for the AEC industry today: May 6, 2020
5 questions engineers will ask after COVID-19 and coronavirus threatens push for denser housing.
Market Data | May 5, 2020
5 must reads for the AEC industry today: May 5, 2020
A new temporary hospital pops up in N.J., and apartment firms' reactivation plans begin to take shape.
Market Data | May 4, 2020
6 must reads for the AEC industry today: May 4, 2020
How working from home is influencing design and is this the end of the open office?