Nonresidential construction spending decreased 0.2% from May to June but is up 5.3% compared with June 2023, according to Associated Builders and Contractors.
For public construction, spending decreased 0.4% for the month and is up 7.2% year to date. Private nonresidential spending fell 0.1% from May to June and is up 4.2% year to date. Spending was down for the month in seven of the 16 nonresidential subcategories.
“A new trend in nonresidential construction is emerging, and it’s not a good thing,” said ABC Chief Economist Anirban Basu. “Despite a bevy of megaprojects in certain parts of the nation, overall nonresidential construction spending appears to have entered a period of stagnation. The flattening of momentum has been apparent for the better part of a year, but the impact of higher interest rates, tighter credit conditions and a softening economy is increasingly apparent in the most recent data, which indicate that aggregate nonresidential construction spending is in decline.
“Despite a recent loss in spending growth momentum, many contractors remain upbeat, according to ABC’s Construction Confidence Index, anticipating growth in revenues and payrolls over the next six months,” Basu continued. “But with interest rates staying higher for longer, it appears that many projects are being put on hold, limiting construction starts, suppressing backlog and perhaps eventually eroding current contractor confidence.”
