Non-residential Construction Spending Increases 1% in November
WASHINGTON, D.C. — National non-residential construction spending grew 0.9% in November, according to an Associated Builders and Contractors (ABC) analysis of data published by the U.S. Census Bureau. On a seasonally adjusted annualized basis, non-residential spending totaled $930.1 billion for the month.
Spending was up on a monthly basis in nine of the 16 non-residential subcategories. Private non-residential spending was up 1.7%, while public non-residential construction spending was down 0.1% in November.
“The average non-residential contractor starts 2023 with considerable backlog,” ABC Chief Economist Anirban Basu said. “Not coincidentally, contractors also have significant confidence regarding current-year prospects, according to ABC’s Construction Confidence Index, which indicates expectations for growth in sales and employment with margins remaining stable.
“November’s construction spending report suggests that this confidence is warranted,” Basu noted. “However, there are countervailing considerations. First, growth in non-residential construction spending in November was not especially broad. Much of the growth came from the manufacturing category, which is partially attributable to construction related to large-scale chip-manufacturing facilities. The balance of growth came mostly from conservation and development, which includes flood-control expenditures. Were it not for those two categories, non-residential construction spending would have been roughly flat in November.
“Second, backlog could dry up,” Basu went on. “Anecdotal evidence suggests that banks are more cautious in their lending to the commercial real-estate and multi-family segments. Fears of recession this year remain pervasive in an environment characterized by high and rising interest rates. It will be interesting to see how well backlog will hold up as contractors continue to build and the economy heads toward what is likely to be a Federal Reserve-induced recession.”
