Construction spending decreased 0.1% from July to August and is down 0.7% compared with August 2019, according to www.abc.org.
For public construction, spending increased 0.2% for the month and is up 4.8% year-to-date. Private nonresidential spending fell 0.3% from July to August and is down 4.3% year-to-date.
“While overall construction spending rose significantly in August, much of that was attributed to surging single-family housing starts,” said Anirban Basu, chief economist for Associated Builders and Contractors. “The picture is very different in a number of nonresidential construction categories, especially in segments that have been disproportionately impacted by the pandemic, such as lodging and office, which are down 12.1% and nearly 9% year over year, respectively.
“The good news is that nonresidential construction spending momentum remains apparent in a number of public segments,” Basu continued. “On a monthly basis, construction spending was up in the water supply, highway/street and educational categories. Spending in the public safety segment is up nearly 40% compared to the same time last year.”
Still, Basu said a challenging time likely is ahead for the construction industry.
“Absent an infrastructure-oriented stimulus package, the likely trajectory of nonresidential construction spending does not appear especially bright,” Basu said. “Commercial real estate fundamentals are poor, with elevated vacancy rates and tighter lending conditions, rendering it probable that private nonresidential construction spending will continue to dip. State and local finances have been pummeled by the pandemic, resulting in less support for the next generation of public projects. Many contractors report declining backlog, according to ABC’s Construction Backlog Indicator, and fewer opportunities to bid on new projects. With winter coming and infection rates poised to rise, the quarters to come are shaping up to be challenging ones.”
