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 | Mar 22, 2017
After a strong year, construction industry anxious about Washington’s proposed policy shifts
Impacts on labor and materials costs at issue, according to latest JLL report.
Market Data | Mar 22, 2017
Architecture Billings Index rebounds into positive territory
Business conditions projected to solidify moving into the spring and summer.
Market Data | Mar 15, 2017
ABC's Construction Backlog Indicator fell to end 2016
Contractors in each segment surveyed all saw lower backlog during the fourth quarter, with firms in the heavy industrial segment experiencing the largest drop.
Market Data | Feb 28, 2017
Leopardo’s 2017 Construction Economics Report shows year-over-year construction spending increase of 4.2%
The pace of growth was slower than in 2015, however.
Market Data | Feb 23, 2017
Entering 2017, architecture billings slip modestly
Despite minor slowdown in overall billings, commercial/ industrial and institutional sectors post strongest gains in over 12 months.
Market Data | Feb 16, 2017
How does your hospital stack up? Grumman/Butkus Associates 2016 Hospital Benchmarking Survey
Report examines electricity, fossil fuel, water/sewer, and carbon footprint.
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.