Nonresidential construction spending fell 1.1% from February to March and is down 7.4% compared with March 2020, according to www.abc.org.
For public construction, spending decreased 1.5% for the month and 5.1% year-to-date. Private nonresidential spending fell 0.9% from February to March and is down 9.1% year-to-date.
Associated Builders and Contractors Chief Economist Anirban Basu said although the longer-term outlook for nonresidential construction looks good, the lingering effects of the COVID-19 pandemic is damaging commercial real estate fundamentals.
“The lodging, office and commercial segments experienced declines in spending in March,” Basu said. “Office vacancy rates are elevated in many markets, and the industry experienced negative net absorption. The trials and tribulations of hotel operators, retailers and restauranteurs are also well-known.
“Public construction spending was weak in March and is down more than 5% on a year-over-year basis,” Basu continued. “While large-scale federal infrastructure outlays are likely in the future, that money has yet to arrive. State and local government finances have generally held up far better than many had predicted earlier in the COVID-19 crisis, but many governments have had to spend significant operational sums to countervail the public health crisis and therefore had to redirect money away from infrastructure.”
Basu said the most recent readings from ABC’s Construction Backlog Indicator suggest the construction spending recovery will be slow during the near-term, but private and public construction spending should gain momentum later this year and in 2022 as COVID-19 vaccinations and re-openings boost the broader economic recovery.
