Construction spending decreased 1.6% from August to September and is down 4.4% compared with September 2019, according to www.abc.org.
For public construction, spending increased 1.7% for the month and is down 2% year-to-date. Private nonresidential spending fell 1.5% from August to September and is down 6% year-to-date.
“The pace is of decline in nonresidential construction spending is accelerating,” said Anirban Basu, chief economist for Associated Builders and Contractors. “This is precisely what had been predicted. Coming into the crisis, the economy was rolling, helping to lift construction backlog amid elevated developer confidence, according to ABC’s Construction Backlog Indicator and Construction Confidence Index. The crisis shattered that equilibrium, producing distressed commercial real estate fundamentals, diminished confidence, postponed and cancelled projects, the embrace of remote work, tighter credit conditions and damaged state and local government finances.
“Though the initial phase of economic recovery has been brisk, economic outcomes are likely to deteriorate markedly during the months ahead absent further stimulus,” Basu continued. “That would further delay nonresidential construction’s eventual recovery. Nonresidential construction spending is down 4.4% from the same time last year, with lodging-related spending down more than 15% and office-related spending down nearly 7%. These are among the segments hardest hit by social distancing directives, and another round of shutdowns would further exacerbate declines in these and other segments.”
Basu said an infrastructure package is key to economic recovery.
“The hope is that policymakers in Washington, D.C., will soon see fit to deliver on a long-awaited infrastructure financing and spending program,” said Basu. “Not only would that accelerate the broader economy’s economic recovery, but a well-executed infrastructure package would make American workers more productive, unleash new private development opportunities and allow America to better compete in the global marketplace. The longer America has to wait for such a package, however, the more vulnerable its citizens will be to further economic dislocations.”
