Nonresidential construction spending rose 0.5% in September, totaling $698.1 billion on a seasonally adjusted basis, according to an Associated Builders and Contractors (ABC) analysis of data from the U.S. Census Bureau. However, nonresidential construction spending is down 2.9% on a year-over-year basis, with construction spending related to manufacturing down 20.3% since September 2016. August and July nonresidential spending totals were revised upwards by a collective $11 billion, however.
“There is a lot of positive news about the U.S. economy right now,” said ABC Chief Economist Anirban Basu. “The nation has added nearly 1.8 million net new jobs over the past year, the official unemployment rate stands at a 16-year low and asset prices have skyrocketed. Those factors have given American household wealth a boost. Despite all of that, nonresidential construction spending is down on a year-over-year basis by nearly 3%.
“Much of this is due to declining public spending in water supply and other public sector categories, but not all,” said Basu. “Key private segments like manufacturing and power have also experienced diminished construction activity. A likely partial explanation is the low commodity prices that characterized much of 2015 and 2016.
“At the same time, construction firms are boosting employment levels, with many firms reporting that the retirement of experienced workers is resulting in rapid hiring of other workers who are hopefully trainable, but who are not yet as productive on a one-for-one basis,” said Basu. “For many firms, this dynamic is likely squeezing profit margins. Many firms are also offering significant pay increases to their most talented workers to enhance retention and delay retirement.
“All of this is consistent with the notion that proposed policy initiatives that would better support U.S. economic growth remain important even in the context of an improving economy,” said Basu. “Beyond the tax reform initiative currently in the spotlight, one hopes that an infrastructure-led stimulus package funded primarily by private investors receives more focus during the months to come.”
Related Stories
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.
Construction Costs | Jan 22, 2024
Construction material prices continue to normalize despite ongoing challenges
Gordian’s most recent Quarterly Construction Cost Insights Report for Q4 2023 describes an industry still attempting to recover from the impact of COVID. This was complicated by inflation, weather, and geopolitical factors that resulted in widespread pricing adjustments throughout the construction materials industries.
Hotel Facilities | Jan 22, 2024
U.S. hotel construction is booming, with a record-high 5,964 projects in the pipeline
The hotel construction pipeline hit record project counts at Q4, with the addition of 260 projects and 21,287 rooms over last quarter, according to Lodging Econometrics.
Multifamily Housing | Jan 15, 2024
Multifamily rent growth rate unchanged at 0.3%
The National Multifamily Report by Yardi Matrix highlights the highs and lows of the multifamily market in 2023. Despite strong demand, rent growth remained unchanged at 0.3 percent.
Self-Storage Facilities | Jan 5, 2024
The state of self-storage in early 2024
As the housing market cools down, storage facilities suffer from lower occupancy and falling rates, according to the December 2023 Yardi Matrix National Self Storage Report.
Designers | Dec 25, 2023
Redefining the workplace is a central theme in Gensler’s latest Design Report
The firm identifies eight mega trends that mostly stress human connections.
Contractors | Dec 12, 2023
The average U.S. contractor has 8.5 months worth of construction work in the pipeline, as of November 2023
Associated Builders and Contractors reported today that its Construction Backlog Indicator inched up to 8.5 months in November from 8.4 months in October, according to an ABC member survey conducted Nov. 20 to Dec. 4. The reading is down 0.7 months from November 2022.