National nonresidential construction spending grew 0.1 percent in July, according to an Associated Builders & Contractors (ABC) analysis of U.S. Census Bureau data.
On a seasonally adjusted annualized basis, nonresidential spending totaled $1.08 trillion and is up 16.5 percent year over year.
Spending was up on a monthly basis in eight of the 16 nonresidential subcategories. Private nonresidential spending increased 0.5 percent, while public nonresidential construction spending was down 0.4 percent in July.
“After today’s jobs report, which indicated that nonresidential construction added an outsized number of jobs in August, one would have expected a strong construction spending growth number as well,” says Anirban Basu, ABC’s chief economist. “Alas, the economic data, just like the economy, continues to be full of surprises. In July, nonresidential construction spending barely expanded. Once one adjusts for inflation, spending declined in real terms.”
Basu adds that a bigger surprise is that construction spending weakness wasn’t concentrated in the private developer-driven segments but, rather, in several public construction segments. These down areas include highway/street, transportation, sewage/waste disposal and conservation/development categories.
Despite these recent dips, Basu says each of these categories has experienced year-over-year spending growth.
“Since nonresidential construction hiring was strong last month, the expectation is that July’s construction spending number will prove to be an aberration,” he says. “Spending growth should be solid going forward, driven in large measure by several massive construction projects in development or early construction stages. That said, those segments that depend most on bank financing are poised to weaken going forward.”
