Demand for different types of construction continued to diverge in June as residential construction increased for the month and the year while nonresidential construction spending fell again, according to a new analysis of federal construction spending data the Associated General Contractors of America released today. Officials noted the nonresidential declines include a steep drop in spending on highway and street projects and urged Congress to quickly pass a new, bipartisan infrastructure measure.
“The pandemic has created a tale of two construction industries, a residential market where demand continues to surge and a nonresidential market that is struggling to gain traction,” said Stephen E. Sandherr, the association’s chief executive officer. “The federal government has a real opportunity to boost nonresidential construction by passing the bipartisan infrastructure measure as quickly as possible.”
Construction spending in June totaled $1.55 trillion at a seasonally adjusted annual rate, an increase of 0.1% from May, and 8.2% higher than the pandemic-depressed rate in June 2020. Once again, residential construction saw monthly and year-over-year gains while non-residential construction spending lagged. The residential construction segment climbed 1.1% for the month and 28.8% year-over-year. The nonresidential construction segment fell by 0.9% compared to May and 6.6% compared to June 2020.
Private nonresidential construction spending fell 0.7% from May to June and 6.0% since June 2020, with year-over-year decreases in all 11 subsegments. The largest private nonresidential category, power construction, fell 1.9% year-over-year and 1.2% from May to June. Among the other large private nonresidential project types, commercial construction—comprising retail, warehouse and farm structures—retreated 2.1% year-over-year and 0.2% for the month. Manufacturing construction fell 0.7% from a year earlier and 1.1% from May. Office construction decreased 9.1% year-over-year and by 0.1% compared to May.
Public construction spending plunged 7.5% year-over-year and 1.2% for the month. Among the largest segments, highway and street construction declined 7.6% from a year earlier and 5.3% compared to May 2021. Public educational construction decreased 9.1% year-over-year and 0.8% in June. Spending on transportation facilities fell 5.7% over 12 months but was up 1.1% in June.
Association officials said the new bipartisan infrastructure measure would invest more than $1.2 trillion to build the nation’s roads, bridges, transit systems, airports, ports, and waterways, drinking water and wastewater systems, energy infrastructure and more. They added that Congress should pass the measure as quickly as possible to have the broadest impact on creating new construction career opportunities.
“It would be a shame if certain members of Congress were to hold new infrastructure investments, and the job opportunities they create, hostage to impose unrelated partisan measures that would undermine the economic recovery,” Sandherr said.
Related Stories
Market Data | Feb 17, 2016
AIA reports slight contraction in Architecture Billings Index
Multifamily residential sector improving after sluggish 2015.
Market Data | Feb 11, 2016
AIA: Continued growth expected in nonresidential construction
The American Institute of Architects’ semi-annual Consensus Construction Forecast indicates a growth of 8% in construction spending in 2016, and 6.7% the following year.
Market Data | Feb 10, 2016
Nonresidential building starts and spending should see solid gains in 2016: Gilbane report
But finding skilled workers continues to be a problem and could inflate a project's costs.
Market Data | Feb 9, 2016
Cushman & Wakefield is bullish on U.S. economy and its property markets
Sees positive signs for construction and investment growth in warehouses, offices, and retail
Market Data | Feb 5, 2016
CMD/Oxford forecast: Nonresidential building growth will recover modestly in 2016
Increased government spending on infrastructure projects should help.
Market Data | Feb 4, 2016
Mortenson: Nonresidential construction costs expected to increase in six major metros
The Construction Cost Index, from Mortenson Construction, indicated rises between 3 and 4% on average.
Contractors | Feb 1, 2016
ABC: Tepid GDP growth a sign construction spending may sputter
Though the economy did not have a strong ending to 2015, the data does not suggest that nonresidential construction spending is set to decline.
Data Centers | Jan 28, 2016
Top 10 markets for data center construction
JLL’s latest outlook foresees a maturation in certain metros.
Market Data | Jan 20, 2016
Nonresidential building starts sag in 2015
CDM Research finds only a few positive signs among the leading sectors.
Market Data | Jan 20, 2016
Architecture Billings Index ends year on positive note
While volatility persists, architecture firms reported healthy performance for 2015.