National nonresidential construction spending decreased 0.2 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 $1.21 trillion.
Spending was down on a monthly basis in 11 of 16 nonresidential subcategories, according to ABC. Private nonresidential spending decreased 0.4 percent in July, while public nonresidential construction spending was up 0.2 percent.
“Nonresidential construction spending declined for the second consecutive month in July but remains just 0.4 percent below the all-time high established in May,” says Anirban Basu, ABC’s chief economist. “While Hurricane Beryl, which interrupted construction activity along the Gulf Coast in early July, contributed to the month’s weak construction spending data, the cumulative effect of high interest rates likely bears more blame. This is particularly true for nonresidential spending in the private sector, which fell 0.4 percent for the month and is up just 4.5 percent over the past year.
Referencing ABC’s Construction Confidence Index, Basu says less than half of contractors expect sales to increase over the next six months.
“[This is] a clear indication that the industry is eagerly awaiting lower interest rates,” Basu says. “Fortunately, it’s all but certain that the Federal Reserve will begin lowering rates at its September meeting. The remaining question is whether it will be a 25- or 50-basis point cut.”
