Nonresidential Construction Spending Dips 0.5% in December

WASHINGTON, DC — National nonresidential construction spending decreased by 0.5% in December, according to an Associated Builders and Contractors analysis of data published today by the US Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $943.5 billion for the month.

Spending fell on a monthly basis in 10 of the 16 nonresidential subcategories. Private nonresidential spending was down 0.5%, while public nonresidential construction spending was down 0.4% in December.

“Nonresidential construction spending fell in December, ending a streak of six straight monthly increases,” said ABC Chief Economist Anirban Basu. “Despite the decline, nonresidential spending is up 13.8% year over year, an increase outpacing both overall inflation (6.4%) and materials prices inflation (+7.6%). More than half of the increase in nonresidential construction over the past year is due to heightened activity in two segments: manufacturing, as megaprojects begin across the nation, and commercial, a category that includes warehouse- and distribution-related construction.

“While contractors remain reasonably confident, according to ABC’s Construction Confidence Index, there is reason for caution,” said Basu. “Worker shortages remain a challenge for contractors, and elevated interest rates have increased borrowing costs, making certain projects unfeasible at the margins while also driving the economy toward a potential recession this year.”

Visit abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, plus analysis of spending, employment, job openings and the Producer Price Index.