Nonresidential construction spending fell 0.9% from May to June and is down 6.6% compared with June 2020, according to www.abc.org.
For public construction, spending decreased 1.2% for the month and 7.6% year-to-date. Private nonresidential spending fell 0.7% from May to June and is down 6% year-to-date.
Associated Builders and Contractors Chief Economist Anirban Basu said the continued decline in construction spending presents a paradox for economists.
“Many contractors report rising backlog and strong expectations for sales, staffing and profit margin growth over the balance of the year, according to ABC’s Construction Backlog Indicator and Construction Confidence Index,” Basu said. “Yet the macroeconomic data continue to show an industry struggling to stabilize from the pandemic-induced recession.
“There is a logical explanation,” he continued. “Despite the lingering pandemic and elevated materials prices, demand for construction services remains high. But this lofty demand is failing to translate into construction spending growth because available capacity to supply services is so constrained, especially by expanding skills shortages. This means the average project is taking longer to complete. It also translates into diminished construction spending on a monthly basis since less services are delivered. Consequently, individual firms generally remain confident about the future given the presence of demand for their services, as well as rising backlog, but the macroeconomic outcomes remain uninspiring as quantity supplied struggles to match quantity demanded.”
