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 | Mar 14, 2018
AGC: Tariff increases threaten to make many project unaffordable
Construction costs escalated in February, driven by price increases for a wide range of building materials, including steel and aluminum.
Market Data | Mar 12, 2018
Construction employers add 61,000 jobs in February and 254,000 over the year
Hourly earnings rise 3.3% as sector strives to draw in new workers.
Steel Buildings | Mar 9, 2018
New steel and aluminum tariffs will hurt construction firms by raising materials costs; potential trade war will dampen demand, says AGC of America
Independent studies suggest the construction industry could lose nearly 30,000 jobs as a result of administration's new tariffs as many firms will be forced to absorb increased costs.
Market Data | Mar 8, 2018
Prioritizing your marketing initiatives
It’s time to take a comprehensive look at your plans and figure out the best way to get from Point A to Point B.
Market Data | Mar 6, 2018
Persistent workforce shortages challenge commercial construction industry as U.S. building demands continue to grow
To increase jobsite efficiency and improve labor productivity, increasingly more builders are turning to alternative construction solutions.
Market Data | Mar 2, 2018
Nonresidential construction spending dips slightly in January
Private nonresidential construction fell 1.5% for the month, while public sector nonresidential spending increased 1.9%.
Market Data | Feb 27, 2018
AIA small firm report: Half of employees have ownership stake in their firm
The American Institute of Architects has released its first-ever Small Firm Compensation Report.
Market Data | Feb 21, 2018
Strong start for architecture billings in 2018
The American Institute of Architects reported the January 2018 ABI score was 54.7, up from a score of 52.8 in the previous month.
Multifamily Housing | Feb 15, 2018
United States ranks fourth for renter growth
Renters are on the rise in 21 of the 30 countries examined in RentCafé’s recent study.
Market Data | Feb 1, 2018
Nonresidential construction spending expanded 0.8% in December, brighter days ahead
“The tax cut will further bolster liquidity and confidence, which will ultimately translate into more construction starts and spending,” said ABC Chief Economist Anirban Basu.