Nonresidential Construction Spending Slips 0.1% in May but Remains Elevated

National nonresidential construction spending saw a slight decline of 0.1% in May, according to a report by the Associated Builders and Contractors (ABC) based on data released recently by the U.S. Census Bureau. Despite this dip, spending remains robust, totaling $1.21 trillion on a seasonally adjusted annualized basis.

The decline was observed in 9 out of the 16 nonresidential subcategories. Private nonresidential spending experienced a drop of 0.3%, whereas public nonresidential construction spending saw a modest increase of 0.4% in May.

The slight reduction in overall spending indicates a mixed performance across different sectors. However, the sustained elevated levels of spending underscore the resilience of the nonresidential construction market in the face of economic fluctuations.

Industry experts are closely monitoring these trends, noting that while certain areas are experiencing a downturn, others continue to show strength. This nuanced landscape suggests a complex but stable environment for nonresidential construction moving forward.

“Nonresidential construction spending has fallen for two consecutive months yet remains just 0.2% below the all-time high achieved in March 2024,” said ABC Chief Economist Anirban Basu. “Much of that progress is attributable to ongoing infrastructure investments, which spurred a sizable 0.4% increase in publicly funded nonresidential spending in May.

“Private nonresidential spending has lagged and, after falling 0.3% in May, is up just 4.1% year over year,” said Basu. “That weakness can be tied to interest rate-sensitive segments like office and commercial, both of which have also been hampered by altered demand dynamics in the wake of the pandemic. Despite this recent private sector moderation, contractors remain confident about the next few quarters, with a majority expecting their sales to increase over the next six months, according to ABC’s Construction Confidence Index.”