Nonresidential construction spending rises 0.4% in August 2023, led by manufacturing and public works sectors

National nonresidential construction spending increased 0.4% in August, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.09 trillion.

Spending was up on a monthly basis in 12 of the 16 nonresidential subcategories. Private nonresidential spending increased by 0.3%, while public nonresidential construction spending was up 0.6% in August.

“Aggregate nonresidential construction spending expanded at a respectable rate in August,” said ABC Chief Economist Anirban Basu. “But manufacturing-related and public sector projects accounted for more than 100% of the monthly increase. Privately financed commercial- and educational-related construction spending declined by almost 1% at least partially due to elevated borrowing costs.

“Despite high interest rates and ongoing weakness in certain segments like office and retail, contractors remain relatively upbeat,” said Basu. “Despite still-high materials costs and ongoing labor shortages, a plurality of contractors expect their profit margins to increase over the next six months, according to ABC’s Construction Confidence Index."

Nonresidential construction spending rises 0.4% in August 2023, led by manufacturing and public works sectors

The Architectural Billings Index measures the general sentiment of U.S. architecture firms about the health of the construction market by measuring 1) design billings and 2) design contracts. Any score above 50 means that, among the architecture firms surveyed, more firms than not reported seeing increases in design work vs. the previous month.