Nonresidential construction spending decreased 0.2% from April to May and is up 17.3% compared with May 2022, according to Associated Builders and Contractors.
For public construction, spending increased 0.1% for the month and is up 12.4% year-to-date. Private nonresidential spending fell 0.3% from April to May and is up 20.5% year-to-date. Spending was down for the month in nine of the 16 nonresidential subcategories.
“Nonresidential construction spending declined in May, ending a streak of 11 consecutive monthly increases,” said ABC Chief Economist Anirban Basu. “While spending is up more than 17% over that span, manufacturing-related construction has accounted for the majority of that increase. Excluding the manufacturing segment, nonresidential construction spending is barely outpacing inflation, up just 6% over the past year.
“Contractors remain relatively upbeat, according to ABC’s Construction Confidence Index, and ongoing strength in manufacturing and publicly financed segments justifies that confidence,” Basu continued. “Unfortunately, conditions may prove challenging in other segments over the next few quarters. Interest rates remain elevated and are likely to rise at least once more over the second half of 2023, exacerbating already tight credit conditions and ultimately limiting construction activity.”
