Public and private nonresidential construction spending slumps in July

Steep monthly declines in public and private nonresidential construction spending offset a surge in homebuilding in July, while industry employment decreased compared to July 2019 levels in two-thirds of the nation’s metro areas, according to an analysis by the Associated General Contractors of America of government data released today. Association officials said many commercial construction firms were likely to continue shedding jobs without needed federal coronavirus relief measures.

“The dichotomy between slumping nonresidential projects—both public and private—and robust homebuilding seems sure to widen as the pandemic continues to devastate state and local finances and much of the private sector,” said Ken Simonson, the association’s chief economist. “Without new federal investments in infrastructure and other measures to boost demand for nonresidential construction, contractors will be forced to let more workers go.”

Construction spending in July totaled $1.36 trillion at a seasonally adjusted annual rate, a gain of 0.1% from June. A 1.2% drop in nonresidential spending nearly canceled out a 2.1% jump in residential spending, which was boosted by growth in both single-family (3.1%) and multifamily construction (4.9%).

Public construction spending decreased by 1.3%, dragged down by a 3.1% drop in highway and street construction spending and a 3.0% decline in educational construction spending, the two largest public segments. The next-largest segment, transportation facilities, also contracted, by 1.6 percent.

Private nonresidential construction spending slid 1.0% from June to July. The largest segment, power construction, dipped 0.1%. Among other large private spending categories, commercial construction—comprising retail, warehouse and farm structures—slumped 3.2%, while manufacturing construction rose 0.2% and office construction fell 0.7%.

Construction employment declined from July 2019 to July 2020 in 238, or 66%, out of 358 metro areas, increased in 90 areas (25%) and held steady in 30. New York City lost the most construction jobs (-26,500, -16%), while the steepest percentage loss occurred in Brockton-Bridgewater-Easton, Mass. (-36%, -2,100 jobs). Baltimore-Columbia-Towson, Md. added the most construction jobs over the year (4,800, 6%), while Walla Walla, Wash. had the largest percentage gain (25%, 300 jobs).

Association officials said that in addition to the new spending and metro employment data, the association is releasing the results of its annual workforce survey tomorrow that will underscore the need for new federal recovery measures. The construction officials called on Congress and the Trump administration to enact new infrastructure investments, pass a one-year extension to the current surface transportation law with additional transportation construction funding and enact liability reforms to shied firms that are protecting workers from the coronavirus from needless lawsuits.

“Without new federal relief measures, the industry’s limited recovery will likely be short lived,” said Stephen E. Sandherr, the association’s chief executive officer. “Congress and the President should be taking advantage of current market conditions to rebuild our infrastructure, restore lost jobs and reinvigorate the economy.”

View the metro employment data, rankings, highs and lows, and top 10.