Construction spending fell 1% from November 2020 to December 2020 and is down 4.8% compared with December 2019, according to www.abc.org.
For public construction, spending increased 0.5% for the month and 2.5% year-to-date. Private nonresidential spending fell 1.7% from November 2020 to December 2020 and is down 9.8% year-to-date.
Associated Builders and Contractors Chief Economist Anirban Basu said the COVID-19 pandemic continues to affect nonresidential construction spending. The pandemic has weakened the commercial real estate sector, which is expected to limit the initial pace of private construction spending recovery in various key segments. Additionally, Basu said public construction will face challenges, and near-term spending growth partially reflects a strong pre-pandemic economy.
“While it is true that the broader economy is poised for rapid economic recovery later this year, nonresidential construction is positioned to lag,” Basu said. “This is often the case given the tighter lending standards and the higher commercial vacancy rates that accompany periods of economic stress. However, the lag in industry recovery could be even lengthier this time around as the specter of remote work threatens the office market, online meeting platforms interfere with recovery in business travel, and more people shop from home as opposed to on Main Street and in malls. The implication is that absent a meaningful federal stimulus package, many nonresidential construction firms and their workers will face a period of vulnerability.”
