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ABC: Nonresidential spending up in November

By |  January 3, 2023

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National nonresidential construction spending grew 0.9 percent in November, according to an Associated Builders & Contractors (ABC) analysis of U.S. Census Bureau data.

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 percent in November, while public nonresidential construction spending was down 0.1 percent.

“The average nonresidential contractor starts 2023 with considerable backlog,” says Anirban Basu, ABC’s chief economist. “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.”

He adds that based on November’s construction spending reports, this confidence among contractors is warranted. There are several considerations to take into account, though.

“First, growth in nonresidential construction spending in November was not especially broad,” Basu says. “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,” he adds. “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.”

Jack Kopanski

About the Author:

Jack Kopanski is the Managing Editor of Pit & Quarry and Editor-in-Chief of Portable Plants. Kopanski can be reached at 216-706-3756 or jkopanski@northcoastmedia.net.

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