According to an Associated Builders and Contractors analysis of U.S. Census Bureau data published today, national nonresidential construction spending declined 0.9% in May, totaling $788.5 billion on a seasonally adjusted annualized basis and a 4.4% increase compared to the same time last year. While total public and private nonresidential spending declined 0.9% since April, public spending was up 11.2% and private spending was down 0.1% year over year.
Among the 16 nonresidential construction spending categories tracked by the Census Bureau, five experienced increases in monthly spending, including transportation (4%), communication (1.3%) and public safety (1.2%). Religious (-5.5%), commercial (-3.3%) and highway and street (-3.4%) experienced the largest monthly decreases, although highway and street spending remained up 17.1% compared to May 2018. Total construction spending is down 2.3% compared to the same time last year, and residential spending is down sharply.
“Private construction spending has been slipping for several months,” said ABC Chief Economist Anirban Basu. “Commercial construction spending decreased nearly 14% during the past year, which represents a stark reversal from previous trends when America’s consumer-spending-led expansion produced substantial demand for commercial construction. That said, commercial spending is up 102% compared to May 2010. Other private construction categories such as office and lodging have also been weak as rising construction and capital costs render pro formas more problematic. There are also growing concerns regarding overbuilding in certain segments/markets.
“What was different about today’s release was the decline in public construction spending,” said Basu. “While the drop was reasonably small on a monthly basis, it stands in stark contrast to the preexisting trend. With the economic expansion entering its record 11th year, state and local government finances are generally in good shape, leaving more money to spend on infrastructure. Based on broad economic dynamics and fiscal considerations, there is little reason to believe that the dip in May portends a slowdown in infrastructure spending during the months ahead.”
Related Stories
Architects | Feb 21, 2024
Architecture Billings Index remains in 'declining billings' state in January 2024
Architecture firm billings remained soft entering into 2024, with an AIA/Deltek Architecture Billings Index (ABI) score of 46.2 in January. Any score below 50.0 indicates decreasing business conditions.
Multifamily Housing | Feb 14, 2024
Multifamily rent remains flat at $1,710 in January
The multifamily market was stable at the start of 2024, despite the pressure of a supply boom in some markets, according to the latest Yardi Matrix National Multifamily Report.
Student Housing | Feb 13, 2024
Student housing market expected to improve in 2024
The past year has brought tough times for student housing investment sales due to unfavorable debt markets. However, 2024 offers a brighter outlook if debt conditions improve as predicted.
Contractors | Feb 13, 2024
The average U.S. contractor has 8.4 months worth of construction work in the pipeline, as of January 2024
Associated Builders and Contractors reported today that its Construction Backlog Indicator declined to 8.4 months in January, according to an ABC member survey conducted from Jan. 22 to Feb. 4. The reading is down 0.6 months from January 2023.
Industry Research | Feb 8, 2024
New multifamily development in 2023 exceeded expectations
Despite a problematic financing environment, 2023 multifamily construction starts held up “remarkably well” according to the latest Yardi Matrix report.
Market Data | Feb 7, 2024
New download: BD+C's February 2024 Market Intelligence Report
Building Design+Construction's monthly Market Intelligence Report offers a snapshot of the health of the U.S. building construction industry, including the commercial, multifamily, institutional, and industrial building sectors. This report tracks the latest metrics related to construction spending, demand for design services, contractor backlogs, and material price trends.
Industry Research | Jan 31, 2024
ASID identifies 11 design trends coming in 2024
The Trends Outlook Report by the American Society of Interior Designers (ASID) is the first of a three-part outlook series on interior design. This design trends report demonstrates the importance of connection and authenticity.
Apartments | Jan 26, 2024
New apartment supply: Top 5 metros delivering in 2024
Nationally, the total new apartment supply amounts to around 1.4 million units—well exceeding the apartment development historical average of 980,000 units.
Self-Storage Facilities | Jan 25, 2024
One-quarter of self-storage renters are Millennials
Interest in self-storage has increased in over 75% of the top metros according to the latest StorageCafe survey of self-storage preferences. Today, Millennials make up 25% of all self-storage renters.
Industry Research | Jan 23, 2024
Leading economists forecast 4% growth in construction spending for nonresidential buildings in 2024
Spending on nonresidential buildings will see a modest 4% increase in 2024, after increasing by more than 20% last year according to The American Institute of Architects’ latest Consensus Construction Forecast. The pace will slow to just over 1% growth in 2025, a marked difference from the strong performance in 2023.