According to an Associated Builders and Contractors analysis of U.S. Census Bureau data released today, national nonresidential construction spending rose 1.2% in February. Seasonally adjusted nonresidential spending totaled $773.8 billion, a 4.8% increase over the same time last year.
Private nonresidential spending fell 0.5% for the month and is only up 0.1% on a year-over-year basis. Public nonresidential spending is up 3.7% for the month and an impressive 12.1% for the year. Highway and street (+9.6%), water supply (+5.2%) and sewage and waste disposal (+5%) spending experienced the largest monthly increases in February, while religious (-4%) and transportation (-3.8%) spending experienced the largest decreases.
“A number of economic readings have come in weaker than expected of late, including retail sales and February employment,” said ABC Chief Economist Anirban Basu. “Now private nonresidential construction has effectively flatlined during the past year, with spending virtually unchanged on a year-ago basis despite higher materials costs. This suggests that the actual physical amount of construction put in place has declined in real terms during the past year.
“As is often the case, it’s tempting to blame the weather,” said Basu. “It is absolutely true that the upper Midwest and New England were hit hard by precipitation and bitterly cold temperatures this winter, which undoubtedly suppressed some level of activity. However, softer growth in private nonresidential construction has been apparent for months. This is not a new phenomenon. Spending in the office, commercial and lodging categories was flat to declining in February.
“By contrast, public nonresidential construction spending was up sharply,” said Basu. “This strongly suggests that there is more at work than weather in terms of factors shaping the data. State and local government finances have continued to improve as the broader economy has expanded. America has generated job growth for 101 consecutive months, which has helped push income tax collections higher and unemployment insurance payments lower. Property values also have risen, as have sales tax collections.
“The standout is the highway and street category, which has experienced nearly 23% growth in spending on a year-over-year basis,” Basu added. “Policymakers also have been paying considerable attention to flood control (with conservation and development up 19% year over year) and water systems (with water supply up nearly 12%).”
Related Stories
Market Data | Jul 6, 2020
Nonresidential construction spending falls modestly in May
Private nonresidential spending declined 2.4% in May and public nonresidential construction spending increased 1.2%.
Market Data | Jul 6, 2020
Construction industry adds 158,000 workers in June but infrastructure jobs decline
Gains in June are concentrated in homebuilding as state and local governments postpone or cancel roads and other projects in face of looming budget deficits.
Market Data | Jul 6, 2020
5 must reads for the AEC industry today: July 6, 2020
Demand growth for mass timber components and office demand has increased as workers return.
Market Data | Jul 2, 2020
Fall in US construction spending in May shows weakness of country’s construction industry, says GlobalData
Dariana Tani, Economist at GlobalData, a leading data and analytics company, offers her view on the situation
Market Data | Jul 2, 2020
6 must reads for the AEC industry today: July 2, 2020
Construction spending declines 2.1% in May and how physical spaces may adapt to a post-COVID world.
Market Data | Jul 1, 2020
Construction spending declines 2.1% in May as drop in private work outweighs public pickup
Federal infrastructure measure can help offset private-sector demand that is likely to remain below pre-coronavirus levels amid economic uncertainty.
Market Data | Jul 1, 2020
7 must reads for the AEC industry today: July 1, 2020
Facebook to build $800 million data center and 329 metro areas added construction jobs in May.
Market Data | Jun 30, 2020
AIA releases strategies and illustrations for reducing risk of COVID-19 in senior living communities
Resources were developed as part of AIA’s “Reopening America: Strategies for Safer Buildings” initiative.
Market Data | Jun 30, 2020
329 metro areas added construction jobs in May
Seattle-Bellevue-Everett, Wash. added the most construction jobs (28,600, 44%) in May.
Market Data | Jun 29, 2020
6 must reads for the AEC industry today: June 29, 2020
HQ tower features gardens on every floor and the head of Hilton talks about how his business will survive.