Nonresidential construction spending decreased 0.5% from May to June but is up 1.2% compared with June 2021, according to www.abc.org.
For public construction, spending decreased 0.5% for the month but is up 0.5% year-to-date. Private nonresidential spending fell 0.5% from May to June but is up 1.7% year-to-date. Spending was down for the month in eight of the 16 nonresidential subcategories.
“There continues to be significant downward pressure on nonresidential construction spending volumes, and that is likely to intensify going forward,” said Associated Builders and Contractors Chief Economist Anirban Basu. “To date, construction spending measured in dollars has been propped up by elevated construction delivery costs, including higher materials prices and rapidly rising wages. Despite those inflationary pressures, aggregate nonresidential construction spending has failed to recover to pre-pandemic levels in nominal terms. The situation looks even worse when adjusting for inflation.
“The primary issue is that those high construction delivery charges are inducing a significant fraction of project owners to reconsider start dates,” Basu continued. “True, backlog remains elevated, according to ABC’s Construction Backlog Indicator, but this may be because it is taking longer to complete projects. Additional project delays and cancellations are likely as borrowing costs continue to ratchet higher for those who purchase construction services and the risk of recession increases. For now, many contractors remain busy and continue to operate at or near capacity. Whether that will continue for another 12 to 18 months remains an unanswered question.”
