- National nonresidential construction spending inched higher by 0.3% in September to a seasonally adjusted annualized basis of $1.1 trillion, according to a new Associated Builders and Contractors analysis.
- After a revision flipped May’s 0.2% drop to a 0.9% gain, September’s jump now indicates the 16th consecutive month of expansion, primarily due to publicly financed construction, said Anirban Basu, ABC chief economist.
- “While some private categories, including power, commercial and amusement and recreation saw healthy month-over-month increases, publicly financed construction accounted for more than 72% of September’s rise,” said Basu. “Given increased federal infrastructure spending and exorbitant financing costs for private construction, that dynamic should remain firmly in place over the coming months.”
The largest nonresidential segments showed mixed results from August to September, according to the Associated General Contractors of America construction spending report.
Commercial construction, which includes warehouse and retail projects, increased 0.7% in September, noted the AGC report. Meanwhile, investment in power, oil and gas projects climbed 0.9%, while spending on education projects also increased 1.8%.
But manufacturing-related spending dipped 0.4%, while highway and street spending also inched lower by 0.1%, according to the AGC report.
“It is encouraging that most categories of construction, including homebuilding, are growing,” said Ken Simonson, AGC chief economist. “But the numbers would be even more impressive if the industry didn’t have so many unfilled job openings.”
Nevertheless, even with the drop in manufacturing-related construction spending, which had been a standout of spending growth, Basu said contractors still remain confident.
“Despite a small decrease in spending in September, manufacturing construction remains the nonresidential sector’s outperformer,” said Basu in the release. “Spending in the category is up 62% over the past year and accounts for nearly 43% of the year-over-year increase in nonresidential construction put in place. With several industrial megaprojects ongoing, spending in the manufacturing segment will remain elevated for several quarters.”
Spending increased on a monthly basis in 7 of the 16 nonresidential subcategories, led by commercial, power and educational construction, according to ABC. Private nonresidential spending inched up 0.1%, while public nonresidential spending ticked up 0.5%.