Pandemic-Related Impacts Are Weighing on Nonresidential Construction
Construction spending once again underwhelmed in June, with overall outlays inching 0.1 percent higher, following a 0.2% decline in May. Residential construction continues to plow ahead, with outlays rising 1.1% in June and outlays for the first six months of the year up 24.5% from last year. By contrast, nonresidential construction outlays fell 0.9% in June and are down 8.1% over the year on a year-to-date basis. Nonresidential construction went into the pandemic with strong momentum, but the project pipeline quickly dried up as more businesses tightened their belts and focused on survival. Sectors most severely impacted by COVID shutdowns have seen the largest pullbacks.
Construction Spending Remains Under Pressure
Total construction spending increased 0.1% in June, coming off a slight upward revision for May. Private outlays rose 0.4%, while public outlays fell 1.2%. All the decline was in nonresidential outlays, which fell 0.7% in the private sector and declined 1.2% in the public sector. Spending for new residential projects continues to increase, with private outlays rising 1.1% and public outlays climbing 0.8%. Within the public sector, the bulk of June’s 1.2% decline was in highway and street projects, which fell 5.3%. Spending for educational facilities fell 0.8%, and outlays for public amusement and recreation facilities declined 1.1%. On a year-to-date basis, spending is down 7.1% or nearly $12 billion. Most of that drop has been in educational facilities (-8.7% and $3.8B), public safety (-29% and $2.6B) and transportation projects (-6.8% and $1.4B). READ FULL ARTICLE >>