Construction spending was a tale of two industries again in November, as soaring single-family construction masked ongoing downturns in private and public nonresidential construction, according to an analysis of new federal construction spending data by the Associated General Contractors of America. Association officials said the new figures underscore the need for new infrastructure investments and other measures to boost demand for nonresidential construction amid the pandemic.
“Private nonresidential construction declined for the fifth-straight month in November, while public nonresidential spending slipped for the fifth time in the past six months,” said Ken Simonson, the association’s chief economist. “Unfortunately, our latest survey finds contractors expect the volume of projects available to bid on in 2021 will be even more meager.”
Construction spending in November totaled $1.46 trillion at a seasonally adjusted annual rate, an increase of 0.9% from the pace in October and 3.8% higher than in November 2019. But the gains were limited to residential construction, which soared 2.6% for the month and 16.2% year-over-year. Meanwhile, private and public nonresidential spending slumped 0.6% from October and 4.7% from a year earlier.
Private nonresidential construction spending decreased for the fifth month in a row, sliding 0.8% from October to November and 9.5% from November 2019. The largest private nonresidential segment, power construction, declined 0.9% for the month. Among the other large private nonresidential project types, commercial construction—comprising retail, warehouse and farm structures—dipped 0.3% for the month, manufacturing construction inched up 0.1%, office construction gained 0.3%, and healthcare construction fell 1.4%.
Public construction spending declined 0.2% for the month but increased 3.1% year-over-year. There were decreases from October to November for most nonresidential categories, although the two largest segments rose: highway and street construction gained 1.8% for the month, while educational construction increased 0.3%.
Private residential construction spending increased for the sixth consecutive month, rising 2.7% in November. Single-family homebuilding jumped 5.1% for the month, while residential improvements spending ticked up 0.2%. Multifamily construction spending was flat.
Association officials said demand for most types of nonresidential construction was likely to remain down for much of the year. They added that they would have more insights on the state of the industry when the association and Sage release their annual Construction Hiring & Business Outlook on Thursday, January 7. In the meantime, they urged the incoming Congress to act quickly to boost investments in infrastructure and pass liability reforms to protect firms that employ necessary safety protocols to protect theirs workers and the public from meritless coronavirus lawsuits.
“Without additional measures to boost demand for nonresidential construction, this year is likely to be a challenging one for the industry,” said Stephen E. Sandherr, the association’s chief executive officer. “The impacts of the pandemic are clearly accumulating for many construction employers.”
Related Stories
Market Data | Jul 13, 2021
ABC’s Construction Backlog Indicator and Contractor Confidence Index rise in June
ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels increased modestly in June.
Market Data | Jul 8, 2021
Encouraging construction cost trends are emerging
In its latest quarterly report, Rider Levett Bucknall states that contractors’ most critical choice will be selecting which building sectors to target.
Multifamily Housing | Jul 7, 2021
Make sure to get your multifamily amenities mix right
One of the hardest decisions multifamily developers and their design teams have to make is what mix of amenities they’re going to put into each project. A lot of squiggly factors go into that decision: the type of community, the geographic market, local recreation preferences, climate/weather conditions, physical parameters, and of course the budget. The permutations are mind-boggling.
Market Data | Jul 7, 2021
Construction employment declines by 7,000 in June
Nonresidential firms struggle to find workers and materials to complete projects.
Market Data | Jun 30, 2021
Construction employment in May trails pre-covid levels in 91 metro areas
Firms struggle to cope with materials, labor challenges.
Market Data | Jun 23, 2021
Construction employment declines in 40 states between April and May
Soaring material costs, supply-chain disruptions impede recovery.
Market Data | Jun 22, 2021
Architecture billings continue historic rebound
AIA’s Architecture Billings Index (ABI) score for May rose to 58.5 compared to 57.9 in April.
Market Data | Jun 17, 2021
Commercial construction contractors upbeat on outlook despite worsening material shortages, worker shortages
88% indicate difficulty in finding skilled workers; of those, 35% have turned down work because of it.
Market Data | Jun 16, 2021
Construction input prices rise 4.6% in May; softwood lumber prices up 154% from a year ago
Construction input prices are 24.3% higher than a year ago, while nonresidential construction input prices increased 23.9% over that span.
Market Data | Jun 16, 2021
Producer prices for construction materials and services jump 24% over 12 months
The 24.3% increase in prices for materials used in construction from May 2020 to last month was nearly twice as great as in any previous year