National nonresidential construction spending declined 0.3% in July, according to an Associated Builders and Contractors analysis of U.S. Census Bureau data recently released. Total nonresidential spending stood at $748.8 billion on a seasonally adjusted, annualized rate in July, an increase of 5.3% from the same time last year. Private nonresidential spending fell 1% in July, while public nonresidential spending expanded 0.7%.
“Construction spending dynamics have reversed almost completely during the past 12 to 18 months,” said ABC Chief Economist Anirban Basu. “Earlier in the cycle, private construction expanded briskly, driven in part by abundantly available financing at very low interest rates. While private construction volumes continue to be elevated, they are no longer expanding at quite the same rate. For instance, construction spending on lodging and office space barely budged for the month, while commercial construction, such as fulfillment and shopping centers, fell 3.3%.
“By contrast, nonresidential construction segments associated with large public components, including conservation and development, education, highway and street, public safety, and sewage and waste disposal all experienced an uptick in spending in July,” said Basu. “Many states are now running budget surpluses for the first time in years, in part due to surging capital gains tax collections. One result is that more public projects are moving forward. As evidence, construction spending in the water supply category is up 29% on a year-over-year basis, conservation and development (e.g. flood control) by 24%, transportation by nearly 21%, public safety-related spending by 17% and sewage and waste disposal by 11%.
“The implication is that the economy’s strong performance is increasingly translating into infrastructure spending, even in the absence of a federal infrastructure package,” said Basu. “Given recent economic and financial market performance, there is every reason to believe that state and local government finances, though still fragile in many instances, will continue to improve. That strongly suggests public construction spending will continue to progress during the months ahead. In constrast, private construction spending growth is more likely to remain constrained for a number of reasons, including recent increases in private borrowing costs and concerns that segments in certain communities are now overbuilt or approaching overbuilt status.”
Related Stories
Industry Research | Apr 25, 2023
The commercial real estate sector shouldn’t panic (yet) about recent bank failures
A new Cushman & Wakefield report depicts a “well capitalized” banking industry that is responding assertively to isolated weaknesses, but is also tightening its lending.
Architects | Apr 21, 2023
Architecture billings improve slightly in March
Architecture firms reported a modest increase in March billings. This positive news was tempered by a slight decrease in new design contracts according to a new report released today from The American Institute of Architects (AIA). March was the first time since last September in which billings improved.
Contractors | Apr 19, 2023
Rising labor, material prices cost subcontractors $97 billion in unplanned expenses
Subcontractors continue to bear the brunt of rising input costs for materials and labor, according to a survey of nearly 900 commercial construction professionals.
Data Centers | Apr 14, 2023
JLL's data center outlook: Cloud computing, AI driving exponential growth for data center industry
According to JLL’s new Global Data Center Outlook, the mass adoption of cloud computing and artificial intelligence (AI) is driving exponential growth for the data center industry, with hyperscale and edge computing leading investor demand.
Healthcare Facilities | Apr 13, 2023
Healthcare construction costs for 2023
Data from Gordian breaks down the average cost per square foot for a three-story hospital across 10 U.S. cities.
Higher Education | Apr 13, 2023
Higher education construction costs for 2023
Fresh data from Gordian breaks down the average cost per square foot for a two-story college classroom building across 10 U.S. cities.
Market Data | Apr 13, 2023
Construction input prices down year-over-year for first time since August 2020
Construction input prices increased 0.2% in March, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data released today. Nonresidential construction input prices rose 0.4% for the month.
Market Data | Apr 11, 2023
Construction crane count reaches all-time high in Q1 2023
Toronto, Seattle, Los Angeles, and Denver top the list of U.S/Canadian cities with the greatest number of fixed cranes on construction sites, according to Rider Levett Bucknall's RLB Crane Index for North America for Q1 2023.
Contractors | Apr 11, 2023
The average U.S. contractor has 8.7 months worth of construction work in the pipeline, as of March 2023
Associated Builders and Contractors reported that its Construction Backlog Indicator declined to 8.7 months in March, according to an ABC member survey conducted March 20 to April 3. The reading is 0.4 months higher than in March 2022.
Market Data | Apr 6, 2023
JLL’s 2023 Construction Outlook foresees growth tempered by cost increases
The easing of supply chain snags for some product categories, and the dispensing with global COVID measures, have returned the North American construction sector to a sense of normal. However, that return is proving to be complicated, with the construction industry remaining exceptionally busy at a time when labor and materials cost inflation continues to put pricing pressure on projects, leading to caution in anticipation of a possible downturn. That’s the prognosis of JLL’s just-released 2023 U.S. and Canada Construction Outlook.