Nonresidential construction spending increased 0.1% from June to July and is up 16.5% compared with July 2022, according to Associated Builders and Contractors.
For public construction, spending decreased 0.4% for the month and is up 11.6% year-to-date. Private nonresidential spending rose 0.5% from June to July and is up 19.8% year-to-date. Spending was up for the month in eight of the 16 nonresidential subcategories.
“After today’s jobs report, which indicated that nonresidential construction added an outsized number of jobs in August, one would have expected a strong construction spending growth number as well,” said ABC Chief Economist Anirban Basu. “Alas, the economic data, just like the economy, continue to be full of surprises. In July, nonresidential construction spending barely expanded. Once one adjusts for inflation, spending declined in real terms.
“Perhaps the bigger surprise is that construction spending weakness was not concentrated in the private developer-driven segments that have struggled to establish consistent momentum, but in a number of public construction segments,” Basu continued. “Monthly spending was down in the highway/street, transportation, sewage/waste disposal and conservation/development categories. However, each of these categories has experienced year-over-year spending growth.”
Basu said July’s construction spending number is expected to be an anomaly because of strong nonresidential construction hiring in August.
“Spending growth should be solid going forward, driven in large measure by several massive construction projects in development or early construction stages,” Basu said. “That said, those segments that depend most on bank financing are poised to weaken going forward.”
