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Industry Updates

Nonresidential Construction Spending Suffers a Small Drop in June

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(Photo credit: iStock.com/claffra)

On the heels of the news that construction employment took a tumble in June, national nonresidential construction spending has taken a hit as well. The Associated Builders and Contractors (ABC) reports that it declined by 0.2% last month, based on ABC’s analysis of data from the U.S. Census Bureau.

Although private nonresidential construction spending actually saw an increase of 0.2%, public nonresidential spending dropped by 0.8%. However, ABC notes, nonresidential construction spending was up by 0.4% since June 2019, thanks to the leadership of the public safety, water supply and power categories.

“The stability of nonresidential construction is remarkable,” ABC Chief Economist Anirban Basu declared. “While gross domestic product crumbled during the second quarter, nonresidential construction spending held its own, partially due to its status as an essential industry in most cities and states.”

Despite the fact that many contractors reported project interruptions during the second quarter, “The nation’s nonresidential construction sector was still able to put roughly as much construction in place as in June 2019,” Basu added. “The industry’s future remains perilous, however.

“Economic fundamentals in many private construction segments have been damaged by the ongoing pandemic, including emerging office and retail vacancies,” Basu continued. “Construction spending in the lodging category is down nearly 15% year over year. Backlog remains healthy, according to ABC’s Construction Backlog Indicator, but many project owners are reporting greater difficulty lining up financing, which will contribute to fewer private construction starts going forward.”

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