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 | Jan 25, 2018
Renters are the majority in 42 U.S. cities
Over the past 10 years, the number of renters has increased by 23 million.
Market Data | Jan 24, 2018
HomeUnion names the most and least affordable rental housing markets
Chicago tops the list as the most affordable U.S. metro, while Oakland, Calif., is the most expensive rental market.
Market Data | Jan 12, 2018
Construction input prices inch down in December, Up YOY despite low inflation
Energy prices have been more volatile lately.
Market Data | Jan 4, 2018
Nonresidential construction spending ticks higher in November, down year-over-year
Despite the month-over-month expansion, nonresidential spending fell 1.3 percent from November 2016.
Contractors | Jan 4, 2018
Construction spending in a ‘mature’ period of incremental growth
Labor shortages are spiking wages. Materials costs are rising, too.
Market Data | Dec 20, 2017
Architecture billings upturn shows broad strength
The American Institute of Architects (AIA) reported the November ABI score was 55.0, up from a score of 51.7 in the previous month.
Market Data | Dec 14, 2017
ABC chief economist predicts stable 2018 construction economy
There are risks to the 2018 outlook as a number of potential cost increases could come into play.
Market Data | Dec 13, 2017
Top world regions and markets in the global hotel construction pipeline
The top world region by project count is North America.
Market Data | Dec 11, 2017
Global hotel construction pipeline is growing
The Total Pipeline stands at 12,427 Projects/2,084,940 Rooms.
Market Data | Dec 11, 2017
Construction backlog surges, sets record in third quarter
CBI is a leading economic indicator that reflects the amount of construction work under contract, but not yet completed.