Key Takeaways

• National nonresidential construction spending decreased 0.4% in October.
• On a seasonally adjusted annualized basis, nonresidential spending totaled $1.228 trillion for the month and is up year-over-year.
• "The effects of these storms on construction spending dynamics should largely dissipate by the end of the year."

Press Release from Associated Builders and Contractors: Storms Suppress Nonresidential Construction Spending in October, Says ABC

WASHINGTON, Dec. 2—National nonresidential construction spending decreased 0.4% in October, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.228 trillion.

Spending was down on a monthly basis in 11 of the 16 nonresidential subcategories. Private nonresidential spending decreased 0.3%, while public nonresidential construction spending was down 0.5% in October.

“Total construction spending rose sharply in October, but that was entirely due to a sharp increase in residential activity,” said ABC Chief Economist Anirban Basu. “Nonresidential construction spending contracted for the month, and the declines were widespread, with spending down in 11 of the 16 subsectors. The 3.9% increase in nonresidential spending over the past 12 months is the smallest since December 2021.

“Some of October’s nonresidential weakness and residential strength can be attributed to hurricanes Helene and Milton,” said Basu. “The storms stalled work on several projects in North Carolina and Florida and initiated a massive increase in residential repair work. Construction of new housing units is actually down slightly over the past year, while spending on renovations and repairs is up by a robust 18.5%.

“The effects of these storms on construction spending dynamics should largely dissipate by the end of the year,” said Basu. “Given that a majority of contractors expect their sales to increase over the next six months, according to ABC’s Construction Confidence Index, there’s reason to expect nonresidential construction spending to rebound in the coming months.”

Press Release from Associated General Contractors of America: Construction Spending Rises 0.4 Percent in October as Residential Gains Outweigh Decreases Among Public and Private Nonresidential Segments

Construction Spending Climbs to $2.174 Trillion Seasonally Adjusted Annual Rate as Federal Projects Get Mired in Red Tape and Private Sector Demand for Certain Types of Projects Slows or Shrinks

Construction spending increased 0.4 percent from September to October as a pickup in single- and multifamily residential building outweighed declines in public outlays and mixed results for private nonresidential categories, according to an analysis of a new government report that the Associated General Contractors of America released today. Association officials said construction has yet to begin on many federally funded projects amid lengthy regulatory reviews.

“Despite a flurry of project announcements by the federal government, much of the money still has not been awarded in construction contracts, let alone work under way,” said Ken Simonson, the association’s chief economist. “At the same time, major private categories are growing more slowly or shrinking.”

Construction spending totaled $2.174 trillion at a seasonally adjusted annual rate in October. That figure is 0.4 percent above the upwardly revised September rate and 5.0 percent above the October 2023 level.

Private residential spending increased 1.5 percent in October and 6.4 percent compared to October 2023. Single-family homebuilding rose 0.8 percent and 1.3 percent, respectively. Multifamily construction edged up 0.2 percent in October but declined 6.8 percent from a year earlier. Spending by homeowners on additions and renovations jumped 2.7 percent for the month and 18.5 percent year-over-year.

Public construction spending declined 0.5 percent for the month but rose 4.5 percent over 12 months. Among the top three segments, highway and street construction slipped 0.7 percent and 1.2 percent respectively, education construction dipped 0.4 percent for the month but rose 0.6 percent, and transportation spending fell by 0.1 percent in October but increased 5.4 percent from a year earlier.

Private nonresidential spending slipped 0.3 percent for the month but posted a 3.5 percent year-over-year gain. Of the three largest segments, manufacturing construction was unchanged from September but 16.3 percent higher than in October 2023. Power construction rose 0.2 percent for the month and 5.3 percent year-over-year. Commercial construction (including warehouse, retail, and farm) fell by 1.1 percent for the month and 11.2 percent compared to last year.

Association officials urged the incoming Trump administration and Congress to explore ways to accelerate federal permitting reviews for infrastructure and construction projects. They also urged the new administration to give federal agencies greater flexibility in complying with new Buy America rules. For example, agencies need to be able to provide waivers when no domestically produced materials are available.

“There is no reason the federal government can’t hold projects to same high standards and still complete required reviews in months, instead of years,” said Jeffrey D. Shoaf, the association’s chief executive officer. “Cutting federal review times and giving agencies more flexibility will help get more construction projects started.”