Non-residential Construction Spending Increases by Modest 0.8% in July
WASHINGTON, D.C. — National non-residential construction spending increased 0.8% in July, 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 $847.6 billion for the month.
Spending was up on a monthly basis in 13 of the 16 non-residential subcategories. Private non-residential spending was up 0.4%, while public non-residential construction spending was up 1.5% in July.
“The non-residential sector continues to grapple with rising borrowing costs, elevated material and labor costs, and pervasive economic pessimism,” ABC Chief Economist Anirban Basu said. “Despite a modest increase in July, non-residential construction spending remains below its pre-pandemic level. There is, however, at least one bright spot for the industry: publicly financed construction. State and local governments are flush with cash, and considerable funding is slated for various forms of infrastructure. In July, spending in the highway and street category increased 4.4%, while spending in the public safety category rose 2.3%.
“For privately financed construction, circumstances could get worse before they get better,” Basu added. “The Federal Reserve recently recommitted to further tightening monetary policy. Market sentiment quickly turned negative. Rather than disappear, supply-chain challenges are proliferating in much of the world, including in Europe and China, and the risk of recession is elevated. This is simply not a set of circumstances conducive to rapid non-residential construction spending growth, and according to the most recent Construction Confidence Index, just 31% of contractors expect their profit margins to grow over the next six months.”