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 | Jul 23, 2019
Despite signals of impending declines, continued growth in nonresidential construction is expected through 2020
AIA’s latest Consensus Construction Forecast predicts growth.
Market Data | Jul 20, 2019
Construction costs continued to rise in second quarter
Labor availability is a big factor in that inflation, according to Rider Levett Bucknall report.
Market Data | Jul 18, 2019
Construction contractors remain confident as summer begins
Contractors were slightly less upbeat regarding profit margins and staffing levels compared to April.
Market Data | Jul 17, 2019
Design services demand stalled in June
Project inquiry gains hit a 10-year low.
Market Data | Jul 16, 2019
ABC’s Construction Backlog Indicator increases modestly in May
The Construction Backlog Indicator expanded to 8.9 months in May 2019.
K-12 Schools | Jul 15, 2019
Summer assignments: 2019 K-12 school construction costs
Using RSMeans data from Gordian, here are the most recent costs per square foot for K-12 school buildings in 10 cities across the U.S.
Market Data | Jul 12, 2019
Construction input prices plummet in June
This is the first time in nearly three years that input prices have fallen on a year-over-year basis.
Market Data | Jul 1, 2019
Nonresidential construction spending slips modestly in May
Among the 16 nonresidential construction spending categories tracked by the Census Bureau, five experienced increases in monthly spending.
Market Data | Jul 1, 2019
Almost 60% of the U.S. construction project pipeline value is concentrated in 10 major states
With a total of 1,302 projects worth $524.6 billion, California has both the largest number and value of projects in the U.S. construction project pipeline.
Market Data | Jun 21, 2019
Architecture billings remain flat
AIA’s Architecture Billings Index (ABI) score for May showed a small increase in design services at 50.2.