National nonresidential construction spending rose 0.5% in September but is down 0.9% on a year-ago basis, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, spending totaled $775.6 billion, 2.4% lower than the cyclical peak in April 2019.
Private nonresidential spending fell 0.3% on a monthly basis and is down 5.7% compared to the same time last year, while public nonresidential construction spending expanded 1.5% for the month and is up 6.6% for the year. This comports neatly with today’s employment report and GDP data released earlier this week, which revealed ongoing growth in outlays for infrastructure but declining investment in structures.
“Construction spending contracted in a number of private segments, including in the commercial and lodging categories,” said ABC Chief Economist Anirban Basu. "While it would be easy to attribute this to a slowing economy and/or growing concerns regarding the saturation of available space in certain private segments, there are also large-scale economic transformations playing a role. Commercial construction spending is down nearly 19%, as traditional retailers continue to contend with the growing presence and capabilities of e-commerce giants, while those in the lodging segment—which dipped in September and is essentially flat year-over-year—are increasingly competing with online platforms such as Airbnb.
“Meanwhile, public construction remains one of the strongest elements of the U.S. economy,” said Basu. “Spending in the water supply category surged nearly 6% in September and is up 20% on a year-over-year basis. Overall, public nonresidential construction is up nearly 7% over the past 12 months as state and local government finances enjoy their best health in more than a decade. While there were some declines on a monthly basis in certain public segments in September, year-over-year spending is up more than 6% in the highway/street category, by nearly 6% in the transportation segment and by nearly 9% in the public safety category.
“Leading indicators, including the Architecture Billings Index, continue to point toward sluggish growth or worse in private construction,” said Basu. “Public construction spending, by contrast, should remain a source of economic expansion during the months ahead, but the looming insolvency of the Highway Trust Fund must be addressed soon for momentum to persist. In September, nine of 16 nonresidential construction segments experienced a decline in spending, and there has been a negative trend in place since April. Accordingly, viewed from a high-level perspective, the outlook for nonresidential construction spending is becoming increasingly uncertain, though available data regarding backlog suggest that the industry will enter 2020 with residual momentum.”
Related Stories
Market Data | Oct 31, 2016
Nonresidential fixed investment expands again during solid third quarter
The acceleration in real GDP growth was driven by a combination of factors, including an upturn in exports, a smaller decrease in state and local government spending and an upturn in federal government spending, says ABC Chief Economist Anirban Basu.
Market Data | Oct 28, 2016
U.S. construction solid and stable in Q3 of 2016; Presidential election seen as influence on industry for 2017
Rider Levett Bucknall’s Third Quarter 2016 USA Construction Cost Report puts the complete spectrum of construction sectors and markets in perspective as it assesses the current state of the industry.
Industry Research | Oct 25, 2016
New HOK/CoreNet Global report explores impact of coworking on corporate real rstate
“Although coworking space makes up less than one percent of the world’s office space, it represents an important workforce trend and highlights the strong desire of today’s employees to have workplace choices, community and flexibility,” says Kay Sargent, Director of WorkPlace at HOK.
Market Data | Oct 24, 2016
New construction starts in 2017 to increase 5% to $713 billion
Dodge Outlook Report predicts moderate growth for most project types – single family housing, commercial and institutional building, and public works, while multifamily housing levels off and electric utilities/gas plants decline.
High-rise Construction | Oct 21, 2016
The world’s 100 tallest buildings: Which architects have designed the most?
Two firms stand well above the others when it comes to the number of tall buildings they have designed.
Market Data | Oct 19, 2016
Architecture Billings Index slips consecutive months for first time since 2012
“This recent backslide should act as a warning signal,” said AIA Chief Economist, Kermit Baker.
Market Data | Oct 11, 2016
Building design revenue topped $28 billion in 2015
Growing profitability at architecture firms has led to reinvestment and expansion
Market Data | Oct 4, 2016
Nonresidential spending slips in August
Public sector spending is declining faster than the private sector.
Industry Research | Oct 3, 2016
Structure Tone survey shows cost is still a major barrier to building green
Climate change, resilience and wellness are also growing concerns.
Industry Research | Sep 27, 2016
Sterling Risk Sentiment Index indicates risk exposure perception remains stable in construction industry
Nearly half (45%) of those polled say election year uncertainty has a negative effect on risk perception in the construction market.
