Press Release from Associated Builders and Contractors: ABC: Nonresidential Construction Spending Increases 1% in November, Says ABC
WASHINGTON, Jan. 3—National nonresidential construction spending grew 0.9% in November, 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 $930.1 billion for the month.
Spending was up on a monthly basis in nine of the 16 nonresidential subcategories. Private nonresidential spending was up 1.7%, while public nonresidential construction spending was down 0.1% in November.
“The average nonresidential contractor starts 2023 with considerable backlog,” said ABC Chief Economist Anirban Basu. “Not coincidentally, contractors also have significant confidence regarding current year prospects, according to ABC’s Construction Confidence Index, which indicates expectations for growth in sales and employment with margins remaining stable."
“November’s construction spending report suggests that this confidence is warranted,” said Basu. “However, there are countervailing considerations. First, growth in nonresidential construction spending in November was not especially broad. Much of the growth came from the manufacturing category, which is partially attributable to construction related to large-scale chip manufacturing facilities. The balance of growth came mostly from conservation and development, which includes flood control expenditures. Were it not for those two categories, nonresidential construction spending would have been roughly flat in November.
“Second, backlog could dry up,” said Basu. “Anecdotal evidence suggests that banks are more cautious in their lending to the commercial real estate and multifamily segments. Fears of recession this year remain pervasive in an environment characterized by high and rising interest rates. It will be interesting to see how well backlog will hold up as contractors continue to build and the economy heads toward what is likely to be a Federal Reserve-induced recession.”
Press Release from Associated General Contractors of America: Construction Spending Edges Up 0.2 Percent In November As Homebuilding Drop, Stalled Public Projects Offset Most Private Nonresidential Gains
Association Officials Urge Biden Administration to Address Infrastructure Regulatory and Funding Delays, Will Release 2023 Outlook During Virtual Briefing on January 4th Offering Hiring and Market Predictions
WASHINGTON, Jan. 3—Total construction spending increased by 0.2 percent in November, dragged down by a lack of new infrastructure projects along with a continuing slide in homebuilding, according to an analysis the Associated General Contractors of America released today of federal spending data. Association officials urged leaders in Washington to speed the release of funds authorized by infrastructure laws passed in 2021 and 2022 and address regulatory delays associated with those projects.
“A variety of private nonresidential categories, as well as multifamily projects, posted solid spending gains in November,” said Ken Simonson, the association’s chief economist. “Many of these segments should continue to do well in 2023. But the timing of public construction, while well-funded, remains unclear.”
Construction spending, not adjusted for inflation, totaled $1.808 trillion at a seasonally adjusted annual rate in November, 0.2 percent above the October rate and 8.5 percent above the November 2021 rate. Spending on private residential construction declined for the sixth consecutive month in November, by 0.5 percent. Spending on private nonresidential construction rose 1.7 percent in November, while public construction investment edged down 0.1 percent.
Among private nonresidential segments, spending on manufacturing plants—the largest type—jumped 6.5 percent for the month and 43 percent compared to November 2021. Commercial construction—comprising warehouse, retail, and farm construction—was unchanged, while private power construction increased 1.2 percent from October. Private health care construction rose 0.1 percent for the month.
Residential spending shrank due to a 2.9 percent contraction from October in single-family homebuilding. That outweighed increases of 2.4 percent in multifamily construction and 1.3 percent in additions and renovations to owner-occupied houses.
The largest public segment, highway and street construction, decreased by 1.0 percent in November. Other infrastructure categories also slipped. Spending declined 0.2 percent for transportation facilities and 2.0 percent for water supply projects. These decreases offset upticks of 0.1 percent for education construction and 0.3 percent for sewage and waste disposal construction.
Association officials said regulatory delays associated with the new Buy America provisions in the Bipartisan Infrastructure Bill and some of the new labor mandates in the Inflation Reduction Act are delaying projects. They added that the association will release, at 2 p.m. eastern on January 4th, its annual construction industry Outlook that will offer insights into the industry’s hiring plans and market expectations for the coming year.
“Much of the Outlook we plan to release is predicated on the assumption the administration will work to accelerate infrastructure projects in 2023,” said Stephen E. Sandherr, the association’s chief executive officer. “That is why the administration should address the regulatory confusion it has created and get work on infrastructure projects started as quickly as possible.”