January Sees Big Decline in Nonresidential Construction Spending

According to an analysis by the Associated Builders and Contractors (ABC) (https://www.abc.org/) released recently by the U.S. Census Bureau, national nonresidential construction spending experienced a sharp decline of 0.4% in January. Total nonresidential spending, on a seasonally adjusted annualized basis, amounted to $1.190 trillion. Among the 16 nonresidential subcategories, spending decreased in 10 of them on a monthly basis. Private nonresidential spending saw a slight dip of 0.1%, while public nonresidential construction spending experienced a more significant decrease of 1.0% in January. “Nonresidential construction spending fell sharply in January, ending a 19-month streak of monthly gains,” said ABC Chief Economist Anirban Basu. “Some of this decrease is due to weather-related factors. That’s especially true in infrastructure categories like highway and street and water supply, both of which exhibited steep declines in spending to start the year but should remain elevated through 2024. “Construction spending in the manufacturing category, on the other hand, continued to surge in January,” said Basu. “Manufacturing now accounts for nearly $1 of every $5 of nonresidential construction spending. “Despite January’s disappointing data, nonresidential construction spending is still up more than 17% over the past year,” said Basu. “Given that year-over-year strength and the fact that a majority of contractors expect their sales to increase over the next six months, according to ABC’s Construction Confidence Index, spending is likely to rebound over the coming months.”