According to an Associated Builders and Contractors analysis of U.S. Census Bureau data released today, national nonresidential construction spending rose 0.3% in April, totaling $792.6 billion on a seasonally adjusted annualized basis, which is a 6.4% increase compared to the same time last year. While public nonresidential spending expanded 4.8% on a monthly basis and increased 15.4% since April 2018, private nonresidential spending fell 2.9% in April and is up just 0.6 % year-over-year.
Among the 16 nonresidential construction spending categories, nine experienced an increase in monthly spending, with the largest increases registered in water supply (9.8%), highway and street (6.8%) and transportation (3.9%). Manufacturing (-7.1%) and commercial (-3.7%) experienced the largest decreases in April, though manufacturing spending is still up 10.9% compared to the same time last year.
“Today’s data release shows that nonresidential construction spending remains vigorous in America,” said ABC Chief Economist Anirban Basu. “While April’s monthly nonresidential construction spending growth of 0.3 percent appears lackluster, this was largely the result of a sizeable upward revision to March construction spending figures.
“Today’s data release also indicates that the baton has now been fully passed,” said Basu. “Earlier in the recovery, nonresidential construction spending growth was primarily driven by private segments. Low interest rates and abundant liquidity helped fuel private investment in hotels, data centers, casinos, fulfillment centers and other forms of private construction. But over the past year, private nonresidential construction spending has barely budged. Meanwhile, public residential spending is up 15.4 percent and April’s spending growth was led by water supply and highway/street.
“Given current levels of backlog, which expanded to 9.5 months in March 2019, nonresidential construction spending should remain elevated,” said Basu. “That said, risks of recession in 2020 are rapidly rising, which has the potential to reduce construction activity in 2021 and/or 2022.”