Nonresidential Construction Spending Declines in June

Associated Builders and Contractors (ABC), a national construction industry trade association representing more than 23,000 members, released on Thursday its analysis of the latest construction spending data from the US Census Bureau.

According to ABC, national nonresidential construction spending declined 0.2% in June. On a seasonally adjusted annual basis, nonresidential spending totaled $1.21 trillion. Nonresidential construction has expanded 5.3% from a year ago.

Spending was down on a monthly basis in 7 of 16 nonresidential subcategories. Private nonresidential spending fell 0.1%, while public nonresidential construction spending was down 0.4% in June.

Adding background and analysis to the report, ABC Chief Economist Anirban Basu said:

“A new trend in nonresidential construction is emerging, and it’s not a good thing. Despite a bevy of megaprojects in certain parts of the nation, overall nonresidential construction spending appears to have entered a period of stagnation. The flattening of momentum has been apparent for the better part of a year, but the impact of higher interest rates, tighter credit conditions, and a softening economy is increasingly apparent in the most recent data, which indicate that aggregate nonresidential construction spending is in decline.

Despite a recent loss in spending growth momentum, many contractors remain upbeat, according to ABC’s Construction Confidence Index, anticipating growth in revenues and payrolls over the next six months. But with interest rates staying higher for longer, it appears that many projects are being put on hold, limiting construction starts, suppressing backlog, and perhaps eventually eroding current contractor confidence.”