ABC: Nonresidential spending up, job openings down

National nonresidential construction spending increased 0.1 percent in June, according to an Associated Builders & Contractors (ABC) analysis of U.S. Census Bureau data.

Spending is up 18 percent over the past 12 months. On a seasonally adjusted annualized basis, nonresidential spending totaled $1.07 trillion in June.

Spending increased on a monthly basis in 12 of the 16 nonresidential subcategories. Private nonresidential spending was virtually unchanged, while public nonresidential construction spending rose 0.3 percent in June.

“Nonresidential construction spending growth downshifted over the past two months,” says Anirban Basu, ABC’s chief economist. “While stakeholders can expect ongoing spending growth in public nonresidential construction segments as more Infrastructure Investment & Jobs Act monies flow into the economy, private developer-driven activity appears to be drying up in the context of higher costs of capital and tighter credit conditions.”

Basu adds that these dynamics will translate into larger spreads in performance among contractors, among other things.

“While those that focus on public work stand to remain busy for years to come, those who specialize in meeting the needs of developers of office buildings, hotels and shopping centers are likely to struggle to support backlog going forward,” he says “The good news is that there remain private construction segments associated with rosier prospects, including manufacturing, data centers and health care.”

Basu

Construction employment

ABC also reports that the construction industry had 374,000 job openings on the last day of June, according to an analysis of U.S. Bureau of Labor Statistics data.

The Bureau’s Job Openings & Labor Turnover Survey defines a job opening as any unfilled position for which an employer is actively recruiting. Industry job openings declined by 5,000 last month and are down 9,000 compared to the same time last year.

“Some will focus on the fact that construction job openings declined in June but the real story is that, despite massive interest rate increases and tighter credit conditions facing developers and others that purchase construction services, the number of unfilled jobs remains so elevated by historical standards,” Basu says. “With a plurality of contractors indicating that they intend to increase staffing levels over the next six months –  according to ABC’s Construction Confidence Index – many will continue to report that their leading challenge is the retention and recruitment of highly trained construction craftspeople.”