Nonresidential construction spending decreased 0.1% from January to February but is up 6.2% compared with February 2021, according to www.abc.org.
For public construction, spending decreased 0.5% for the month but is up 1.4% year-to-date. Private nonresidential spending rose 0.2% from January to February and is up 9.7% year-to-date.
Associated Builders and Contractors Chief Economist Anirban Basu said nonresidential spending fell despite inflationary pressures that should have boosted spending, which means spending likely has declined “in real terms.”
“Moreover, the Russia-Ukraine war has spawned further materials price increases, which in turn raises the risk that project owners will decide to postpone or cancel projects,” Basu said. “ABC’s Construction Confidence Index indicates that a growing number of contractors expect to trim their margins during the year ahead to induce purchasers to continue to move forward. The spread of an omicron subvariant in China has started to interfere with production there, which translates to additional supply chain disruptions.
“As if that were not enough, the risk of recession is rising,” Basu continued. “While there is evidence of ongoing momentum, a recent increase in interest rates coupled with hawkish statements from the Federal Reserve imply that credit conditions will become more challenging this year. The question is whether the Federal Reserve can slow economic growth to counter inflation without driving the economy into recession.”
