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 | Feb 1, 2017
Nonresidential spending falters slightly to end 2016
Nonresidential spending decreased from $713.1 billion in November to $708.2 billion in December.
Market Data | Jan 31, 2017
AIA foresees nonres building spending increasing, but at a slower pace than in 2016
Expects another double-digit growth year for office construction, but a more modest uptick for health-related building.
High-rise Construction | Jan 23, 2017
Growth spurt: A record-breaking 128 buildings of 200 meters or taller were completed in 2016
This marks the third consecutive record-breaking year for building completions over 200 meters.
Market Data | Jan 18, 2017
Fraud and risk incidents on the rise for construction, engineering, and infrastructure businesses
Seven of the 10 executives in the sector surveyed in the report said their company fell victim to fraud in the past year.
Market Data | Jan 18, 2017
Architecture Billings Index ends year on positive note
Architecture firms close 2016 with the strongest performance of the year.
Market Data | Jan 12, 2017
73% of construction firms plan to expand their payrolls in 2017
However, many firms remain worried about the availability of qualified workers.
Market Data | Jan 9, 2017
Trump market impact prompts surge in optimism for U.S. engineering firm leaders
The boost in firm leader optimism extends across almost the entire engineering marketplace.
Market Data | Jan 5, 2017
Nonresidential spending thrives in strong November spending report
Many construction firms have reported that they remain busy but have become concerned that work could dry up in certain markets in 2017 or 2018, says Anirban Basu, ABC Chief Economist.
Market Data | Dec 21, 2016
Architecture Billings Index up slightly in November
New design contracts also return to positive levels, signifying future growth in construction activity.
Market Data | Dec 21, 2016
Will housing adjust to an aging population?
New Joint Center report projects 66% increase in senior heads of households by 2035.