National nonresidential construction spending declined 0.9% in May, 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 $812.5 billion for the month. Private nonresidential spending declined 2.4% in May and public nonresidential construction spending increased 1.2%.
“Certain aspects of today’s data release are precisely what was anticipated, while other elements are rather surprising,” said ABC Chief Economist Anirban Basu. “For instance, the precipitous 5.3% decline in health care-related construction spending is hardly shocking, as many elective surgeries, dental appointments and wellness checkups were postponed, resulting in billions of dollars of losses among medical systems. In addition, many medical systems have experienced large-scale layoffs in an effort to preserve cash balances.
“Other segments negatively affected include lodging, manufacturing and power, which was expected,” said Basu. “A general lack of travel and occupancy has slowed hotel construction. A shrunken global economy and disrupted worldwide supply chains have pummeled industrial construction. And the energy sector has taken a hit from commodity prices that remain significantly lower than pre-crisis levels, truncating demand for new construction.
“What is surprising is the overall stability of construction spending,” said Basu. “In May, nonresidential construction spending declined by less than 1%, which represents a level of stability not enjoyed by much of the balance of the economy. Spending in a number of categories, mostly public, was higher for the month, including highway/street, public safety, transportation and water supply. Moreover, certain construction segments may experience rapid recovery going forward, including health care, manufacturing and power. For now, construction spending data and ABC’s Construction Backlog Indicator, which stood at 7.9 months in May, show that the industry has managed to remain a bulwark of relative stability in the face of ongoing pandemic-induced economic dislocations.”
Related Stories
Market Data | Sep 21, 2018
JLL fit out report portrays a hot but tenant-favorable office market
This year’s analysis draws from 2,800 projects.
Market Data | Sep 21, 2018
Mid-year forecast: No end in sight for growth cycle
The AIA Consensus Construction Forecast is projecting 4.7% growth in nonresidential construction spending in 2018.
Market Data | Sep 19, 2018
August architecture firm billings rebound as building investment spurt continues
Southern region, multifamily residential sector lead growth.
Market Data | Sep 18, 2018
Altus Group report reveals shifts in trade policy, technology, and financing are disrupting global real estate development industry
International trade uncertainty, widespread construction skills shortage creating perfect storm for escalating project costs; property development leaders split on potential impact of emerging technologies.
Market Data | Sep 17, 2018
ABC’s Construction Backlog Indicator hits a new high in second quarter of 2018
Backlog is up 12.2% from the first quarter and 14% compared to the same time last year.
Market Data | Sep 12, 2018
Construction material prices fall in August
Softwood lumber prices plummeted 9.6% in August yet are up 5% on a yearly basis (down from a 19.5% increase year-over-year in July).
Market Data | Sep 7, 2018
Safety risks in commercial construction industry exacerbated by workforce shortages
The report revealed 88% of contractors expect to feel at least a moderate impact from the workforce shortages in the next three years.
Market Data | Sep 5, 2018
Public nonresidential construction up in July
Private nonresidential spending fell 1% in July, while public nonresidential spending expanded 0.7%.
Market Data | Aug 30, 2018
Construction in ASEAN region to grow by over 6% annually over next five years
Although there are disparities in the pace of growth in construction output among the ASEAN member states, the region’s construction industry as a whole will grow by 6.1% on an annual average basis in the next five years.