Commercial Construction Spending Dips First Time in Nearly a Year


According to the Associated Builders and Contractors, national nonresidential construction spending shrunk for the first time in 11 months. The slight decrease comes on the heels of an 11-month record of commercial and industrial construction spending increases, propelled by robust manufacturing construction.

ABC Chief Economist Anirban Basu says although overall nonresidential construction spending is up more than 17 percent since August 2022, manufacturing-specific construction activity accounted for most of that increase.

“Excluding the manufacturing segment, nonresidential construction spending is barely outpacing inflation, up just 6 percent over the past year,” Basu said.

Spending in the manufacturing sector, according to Construction Dive, edged up 1 percent in May and remains up 76 percent year over year. Meanwhile data center construction – a subset of office construction – also inched up 1 percent in May and remains up 6.7 percent year over year.

Yet despite these increases in private-sector, nonresidential construction spending, most other categories are lagging behind, says Ken Simonson, Associated General Contractors of America chief economist.

“Our analysis of federal industry data indicates that public construction spending posted mixed results, as the largest infrastructure categories declined for the month and education spending flattened,” said Simonson. “Highway and street construction dipped 0.4 percent from April and public spending on transportation facilities – such as airports, transit and passenger rail – decreased 0.8 percent.”

Commercial construction spending including warehouse and retail builds also dipped 1.8 percent in May.

“The data for May show there has been no letup in the feverish pace of manufacturing construction but a very mixed picture for other project types,” Simonson said.

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