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Nonresidential Construction Spending Rebounds Slightly in September


National nonresidential construction spending rose 0.5 percent in September but is down 0.9 percent on a year-ago basis, according to an Associated Builders and Contractors analysis of data published Nov. 1 by the U.S. Census Bureau. On a seasonally adjusted annualized basis, spending totaled $775.6 billion, 2.4 percent lower than the cyclical peak in April 2019.

    

Private nonresidential spending fell 0.3 percent on a monthly basis and is down 5.7 percent compared to the same time last year, while public nonresidential construction spending expanded 1.5 percent for the month and is up 6.6 percent for the year. This comports neatly with the Nov. 1 employment report and GDP data released earlier that week, which revealed ongoing growth in outlays for infrastructure but declining investment in structures.

    

“Construction spending contracted in a number of private segments, including in the commercial and lodging categories,” said ABC Chief Economist Anirban Basu. “While it would be easy to attribute this to a slowing economy and/or growing concerns regarding the saturation of available space in certain private segments, there are also large-scale economic transformations playing a role. Commercial construction spending is down nearly 19 percent, as traditional retailers continue to contend with the growing presence and capabilities of e-commerce giants, while those in the lodging segment, which dipped in September and is essentially flat year-over-year, are increasingly competing with online platforms such as Airbnb.

    

“Meanwhile, public construction remains one of the strongest elements of the U.S. economy,” said Basu. “Spending in the water supply category surged nearly 6 percent in September and is up 20 percent on a year-over-year basis. Overall, public nonresidential construction is up nearly 7 percent over the past 12 months as state and local government finances enjoy their best health in more than a decade. While there were some declines on a monthly basis in certain public segments in September, year-over-year spending is up more than 6 percent in the highway/street category, by nearly 6 percent in the transportation segment and by nearly 9 percent in the public safety category.

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