AGC: Nonresidential construction ‘continuing to slide’

Construction spending totaled $1.44 trillion in October, at a seasonally-adjusted rate, marking an increase of 1.3 percent from September and 3.7 percent higher than October 2019, according to analysis of federal construction data by the Associated General Contractors of America (AGC).

However, AGC notes that gains were limited to residential construction, which saw a 2.9 percent uptick from September and a 14.6 boost from October 2019.

In contrast, private and public nonresidential spending remained essentially flat from September while declining 3.7 percent from the same period last year.

“The October spending report shows private nonresidential construction is continuing to slide,” says Ken Simonson, AGC’s chief economist. “Public construction spending has fluctuated in recent months but both types of nonresidential spending have fallen significantly from recent peaks this year and appear to be heading even lower.”

Private nonresidential construction slipped 0.7 percent – the fourth consecutive month of spending decline – with drawbacks in nine of 11 categories.

Private residential construction spending, on the other hand, gained 2.9 percent in October. Single-family homebuilding rose 5.6 percent in October, multifamily construction spending improved 1.2 percent and residential improvements spending was flat.

Public construction spending improved 1 percent in October and 3.7 percent compared to the same period last year. Highway and street construction – the largest public category – increased 1.6 percent for the month.

However, despite gains in certain segments, AGC officials say demand for nonresidential construction is unlikely to rebound in the near-term without new federal relief measures.

“As long as the coronavirus undermines private sector confidence and public sector budgets, the only way to save good-paying construction careers is through new federal relief measures,” says Stephen Sandherr, CEO at AGC. “Fixing the nation’s infrastructure, preserving the benefits of the PPP program and protecting honest employers will give the economy a much needed short-term boost.”