- National nonresidential construction spending increased by 0.7% in March to a seasonally adjusted annualized basis of $997.1 billion, according to a new Associated Builders and Contractors analysis.
- The manufacturing construction boom continues to predominantly account for the increase, according to ABC. The sector posted a 4.6% increase in March, and without those manufacturing construction projects, the nonresidential category would have posted flat results, ABC said.
- “Nonresidential construction spending increased for the 10th time in the past 11 months,” said Anirban Basu, ABC chief economist. “As has been the case for the past several months, though, the expansion in nonresidential investment is attributable to manufacturing.”
Total construction spending, which includes housing, increased 0.3% in March. That was largely due to manufacturing growth as well, according to an Associated General Contractors of America report.
The manufacturing construction boom, which has been spurred by the onshoring movement born during the pandemic, is “really helping construction weather the softening residential and other nonresidential markets,” said Stephen Sandherr, AGC CEO.
Commercial construction, such as warehouse and retail, declined 0.8%, while power construction also dipped 0.3% in March, according to AGC. Accounting for inflation, real nonresidential construction spending actually declined in March, according to ABC.
While much of construction has become a one-trick manufacturing pony, contractors still remain optimistic about their sales and profit margins for the next six months, despite high interest rates and recession concerns, said Basu.
“Spending has increased over the past year in every nonresidential subsector except for the power category, and multifamily construction is up 23% over the past year,” said Basu.
Nevertheless, even as overall demand continues to increase, most firms continue to report challenges around hiring enough workers to keep pace with that demand, said Sandherr.
So far, single-family construction remains the only construction category that has been meaningfully affected by interest rate hikes, said Basu. Spending in the sector decreased 22.9% since March 2022, according to ABC.