National nonresidential construction spending declined 1.8% in June, totaling $773.8 billion on a seasonally adjusted annualized basis—a 2.3% increase compared to the same time a year ago, according to an Associated Builders and Contractors analysis of U.S. Census Bureau data published today. Public nonresidential spending fell 3.7% in June, but is up 6.4% year over year, while private nonresidential spending fell 0.3% on a monthly basis and is up 0.4% from June 2018.
Among the 16 nonresidential construction spending categories tracked by the Census Bureau, seven experienced increases in monthly spending, although only the conservation and development (+3.8%) and commercial (+1.3%) categories increased by more than 1%. While spending in several categories fell for the month, significant decreases in the publicly driven educational (-6.5%) and highway and street (-6.3%) categories accounted for nearly all of the monthly decline.
“Like the balance of the U.S. economy, nonresidential construction spending appears to be softening, albeit gradually,” said ABC Chief Economist Anirban Basu. “Private nonresidential construction spending has been trending lower for several months, and segments like office and lodging are no longer the drivers of construction spending growth that they had been, likely due to growing concerns about market saturation.
“The dip in public construction may have been merely temporary, which is likely the case given the ongoing strength of state and local government finances.” said Basu. “And with the economy still adding substantial numbers of jobs, wages growing at or near a decade-high pace, consumers continuing to spend and property values remaining stable, local and state governments should continue to experience solid income, retail and real estate tax collections. All things being equal, that should help fuel infrastructure outlays, especially given still very low borrowing costs.
“While many observers continue to focus on issues such as trade disputes, high levels of corporate debt and asset prices that are susceptible to sharp declines, the U.S. construction industry’s most significant source of uncertainty may be the pending insolvency of the Highway Trust Fund,” said Basu. “That insolvency is now a mere two years away, and if policymakers fail to act expeditiously, state and local policymakers may choose to postpone certain projects given the rising uncertainty of federal funding. The highway/street and transportation categories are especially vulnerable to such dynamics.”
Related Stories
Market Data | Nov 12, 2018
Leading hotel markets in the U.S. construction pipeline
Projects already under construction and those scheduled to start construction in the next 12 months, combined, have a total of 3,782 projects/213,798 rooms and are at cyclical highs.
Market Data | Nov 6, 2018
Unflagging national office market enjoys economic tailwinds
Stable vacancy helped push asking rents 4% higher in third quarter.
Market Data | Nov 2, 2018
Nonresidential spending retains momentum in September, up 8.9% year over year
Total nonresidential spending stood at $767.1 billion on a seasonally adjusted, annualized rate in September.
Market Data | Oct 30, 2018
Construction projects planned and ongoing by world’s megacities valued at $4.2trn
The report states that Dubai tops the list with total project values amounting to US$374.2bn.
Market Data | Oct 26, 2018
Nonresidential fixed investment returns to earth in Q3
Despite the broader economic growth, fixed investment inched 0.3% lower in the third quarter.
Market Data | Oct 24, 2018
Architecture firm billings slow but remain positive in September
Billings growth slows but is stable across sectors.
Market Data | Oct 19, 2018
New York’s five-year construction spending boom could be slowing over the next two years
Nonresidential building could still add more than 90 million sf through 2020.
Market Data | Oct 8, 2018
Global construction set to rise to US$12.9 trillion by 2022, driven by Asia Pacific, Africa and the Middle East
The pace of global construction growth is set to improve slightly to 3.7% between 2019 and 2020.
Market Data | Sep 25, 2018
Contractors remain upbeat in Q2, according to ABC’s latest Construction Confidence Index
More than three in four construction firms expect that sales will continue to rise over the next six months, while three in five expect higher profit margins.
Market Data | Sep 24, 2018
Hotel construction pipeline reaches record highs
There are 5,988 projects/1,133,017 rooms currently under construction worldwide.