Report: Construction spending up, but so are cancellations, delays

By |  November 2, 2020


Construction spending in September totaled $1.41 trillion at a seasonally-adjusted annual rate, marking a 3 percent uptick from August and a 1.5 percent increase from September 2019, the Associated General Contractors of America (AGC) reports.

By segment, private and public nonresidential spending declined by a combined 1.6 percent since August and 4.4 percent from the same period last year.

Nonresidential construction spending

More specifically, private nonresidential construction spending was down 1.5 percent from August, with decreases in nine of 11 categories, including power construction (down 2.2 percent), manufacturing construction (down 2.1 percent) and commercial construction (down 1.9 percent). Office construction improved 0.3 percent from August.

Residential construction spending

Private residential construction spending, meanwhile, improved 2.8 percent from August – the fourth straight month of improvement – and 9.9 percent year over year. Single-family homebuilding was up 5.7 percent for the month while multifamily construction spending improved 1.2 percent.

In contrast, residential improvements dropped 0.4 percent.

Public construction spending

Public construction spending declined in September (down 1.7 percent), marking the fourth consecutive monthly drop. Highway and street construction – the largest public category – slumped 5.4 percent while transportation construction dropped 0.3 percent. Education construction, however, was up 2 percent in September.

“The September spending report shows the gulf between housing and nonresidential markets is growing steadily wider,” says Ken Simonson, AGC’s chief economist. “In our October survey, 75 percent of respondents reported a postponed or canceled project, up from 60 percent in August and 32 percent in June.”

Other AGC takeaways

In addition, AGC notes that its October survey found the majority of contractors do not plan to expand employment during the next 12 months due to the pandemic.

“The pandemic is suppressing demand for new office buildings, hotels and shopping centers, even while it inspires many people to build bigger homes,” says Stephen Sandherr, CEO of AGC. “Without new federal investments in infrastructure and other needed relief measures, commercial firms will have a hard time retaining staff or investing in new equipment and supplies.”

Featured image: P&Q Staff

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