National nonresidential construction spending was down by 0.5% in June, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $829.4 billion for the month.
Spending was down on a monthly basis in eight of the 16 nonresidential subcategories. Both private and public nonresidential spending fell by 0.5% in June.
“There continues to be significant downward pressure on nonresidential construction spending volumes, and that is likely to intensify going forward,” said ABC Chief Economist Anirban Basu. “To date, construction spending measured in dollars has been propped up by elevated construction delivery costs, including higher materials prices and rapidly rising wages. Despite those inflationary pressures, aggregate nonresidential construction spending has failed to recover to pre-pandemic levels in nominal terms. The situation looks even worse when adjusting for inflation.
“The primary issue is that those high construction delivery charges are inducing a significant fraction of project owners to reconsider start dates,” said Basu. “True, backlog remains elevated, according to ABC’s Construction Backlog Indicator, but this may be because it is taking longer to complete projects. Additional project delays and cancellations are likely as borrowing costs continue to ratchet higher for those who purchase construction services and as the risk of recession increases. For now, many contractors remain busy and continue to operate at or near capacity. Whether that will continue for another 12 to 18 months remains an unanswered question.”
Related Stories
Market Data | Jan 19, 2021
2021 construction forecast: Nonresidential building spending will drop 5.7%, bounce back in 2022
Healthcare and public safety are the only nonresidential construction sectors that will see growth in spending in 2021, according to AIA's 2021 Consensus Construction Forecast.
Market Data | Jan 13, 2021
Atlanta, Dallas seen as most favorable U.S. markets for commercial development in 2021, CBRE analysis finds
U.S. construction activity is expected to bounce back in 2021, after a slowdown in 2020 due to challenges brought by COVID-19.
Market Data | Jan 13, 2021
Nonres construction could be in for a long recovery period
Rider Levett Bucknall’s latest cost report singles out unemployment and infrastructure spending as barometers.
Market Data | Jan 13, 2021
Contractor optimism improves as ABC’s Construction Backlog inches up in December
ABC’s Construction Confidence Index readings for sales, profit margins, and staffing levels increased in December.
Market Data | Jan 11, 2021
Turner Construction Company launches SourceBlue Brand
SourceBlue draws upon 20 years of supply chain management experience in the construction industry.
Market Data | Jan 8, 2021
Construction sector adds 51,000 jobs in December
Gains are likely temporary as new industry survey finds widespread pessimism for 2021.
Market Data | Jan 7, 2021
Few construction firms will add workers in 2021 as industry struggles with declining demand, growing number of project delays and cancellations
New industry outlook finds most contractors expect demand for many categories of construction to decline.
Market Data | Jan 5, 2021
Barely one-third of metros add construction jobs in latest 12 months
Dwindling list of project starts forces contractors to lay off workers.
Market Data | Jan 4, 2021
Nonresidential construction spending shrinks further in November
Many commercial projects languish, even while homebuilding soars.
Market Data | Dec 29, 2020
Multifamily transactions drop sharply in 2020, according to special report from Yardi Matrix
Sales completions at end of Q3 were down over 41 percent from the same period a year ago.