National nonresidential construction spending declined 0.4% in August, according to an Associated Builders and Contractors analysis of U.S. Census Bureau data published today. On a seasonally adjusted annualized basis, spending totaled $773.8 billion, 0.3% higher than in August 2018.
Private nonresidential spending fell 1% on a monthly basis and is down 2.8% compared to the same time last year. Public nonresidential construction expanded 0.4% for the month and 4.8% for the year.
"Nonresidential construction spending is down nearly 3% from its peak in April 2019 due to declines in private construction,” said ABC Chief Economist Anirban Basu. "Construction spending in the commercial category, which encompasses retail space among other segments, is down nearly 12% on a year-over-year basis. Spending related to lodging, including new hotel construction, was down 0.7% for the month and is up less than 4% year over year. Spending in the power segment also decreased in August and is down 3.5% compared to the same time last year."
“All of this is consistent with a slowing economy, especially as measures such as industrial production and capacity utilization remain stagnant,” said Basu. “While this could be attributed to trade wars and a slowing global economy, construction dynamics are rarely so simple. Another likely explanation is that America’s growing shortage of skilled construction workers has driven up the cost of delivering construction services, even in the context of flat materials prices, resulting in more project owners delaying projects.
“On the other hand, public construction spending continues to rise,” said Basu. “Construction spending on public safety is up 13.5% on a year-over-year basis and spending in the sewage/waste disposal category is up nearly 19%. State and local governments continue to benefit from an economy that has pushed property tax, sales tax and income tax collections higher. Low borrowing costs also serve as an inducement to leverage revenues with debt, resulting in more infrastructure spending. Given the recent path of interest rates, this dynamic should continue into 2020.”
Related Stories
Market Data | Jun 22, 2018
Multifamily market remains healthy – Can it be sustained?
New report says strong economic fundamentals outweigh headwinds.
Market Data | Jun 21, 2018
Architecture firm billings strengthen in May
Architecture Billings Index enters eighth straight month of solid growth.
Market Data | Jun 20, 2018
7% year-over-year growth in the global construction pipeline
There are 5,952 projects/1,115,288 rooms under construction, up 8% by projects YOY.
Market Data | Jun 19, 2018
ABC’s Construction Backlog Indicator remains elevated in first quarter of 2018
The CBI shows highlights by region, industry, and company size.
Market Data | Jun 19, 2018
America’s housing market still falls short of providing affordable shelter to many
The latest report from the Joint Center for Housing Studies laments the paucity of subsidies to relieve cost burdens of ownership and renting.
Market Data | Jun 18, 2018
AI is the path to maximum profitability for retail and FMCG firms
Leading retailers including Amazon, Alibaba, Lowe’s and Tesco are developing their own AI solutions for automation, analytics and robotics use cases.
Market Data | Jun 12, 2018
Yardi Matrix report details industrial sector's strength
E-commerce and biopharmaceutical companies seeking space stoke record performances across key indicators.
Market Data | Jun 8, 2018
Dodge Momentum Index inches up in May
May’s gain was the result of a 4.7% increase by the commercial component of the Momentum Index.
Market Data | Jun 4, 2018
Nonresidential construction remains unchanged in April
Private sector spending increased 0.8% on a monthly basis and is up 5.3% from a year ago.
Market Data | May 30, 2018
Construction employment increases in 256 metro areas between April 2017 & 2018
Dallas-Plano-Irving and Midland, Texas experience largest year-over-year gains; St. Louis, Mo.-Ill. and Bloomington, Ill. have biggest annual declines in construction employment amid continuing demand.