Construction spending rose 0.9% from December 2020 to January but is down 5% compared with January 2020, according to www.abc.org.
For public construction, spending increased 1.6% for the month and 2.4% year-to-date. Private nonresidential spending rose 0.4% from December 2020 to January and is down 10.1% year-to-date.
Associated Builders and Contractors Chief Economist Anirban Basu said the stabilization of overall nonresidential construction spending is remarkable amid the effects of the COVID-19 pandemic. However, he said there are some caveats.
“Private nonresidential construction remains soft in the context of compromised commercial real estate fundamentals,” Basu said. “Construction spending in the lodging segment is down nearly 23% over the past year, and office construction spending is down on both a monthly and yearly basis. The trajectory of remote work, business travel and brick-and-mortar retail is still uncertain, so construction spending in a large number of private categories is poised to remain soft for the foreseeable future.
“There is at least one additional consideration that serves as a bit of a damper in what was an otherwise decent construction spending report for January,” Basu continued. “The rise in construction spending in January could largely reflect rising materials prices and efforts by contractors to pass at least some of those increases to purchasers of construction services. It comes as little surprise that many of the contractors who expect rising sales and staffing levels during the first half of 2021 also anticipate shrinking margins.”
