Dive brief:
- Non-residential construction spending fell 0.4% in October at a seasonally adjusted annual rate of $1.23 trillion due to the impacts of Hurricanes Helene and Milton in late September and early October, according to an analysis of Census Bureau data of the United States from Associated Builders and Contractors published Monday.
- Total construction spending rose in October, but hurricane recovery efforts skewed the numbers. Non-residential public spending fell 0.5%, while private non-residential spending fell 0.3%.
- The decline reflects constant challenges in non-residential constructionbut optimism for a rebound persists as the storm’s impacts subside and contractors anticipate higher sales in the coming months, according to ABC.
Diving knowledge:
The decline in nonresidential construction spending reflects disruptions from the storms and ongoing economic pressures weighing on private sector activity, said Anirban Basu, ABC’s chief economist.
“The storms halted work on several projects in North Carolina and Florida and initiated a massive increase in residential repair work,” Basu said in the statement. “New home building has fallen slightly over the past year, while spending on renovations and repairs has increased by 18.5%.”
Spending fell monthly in 11 of 16 non-residential subcategories, according to ABC. Meanwhile, public spending on construction remains limited to allow for delayssaid Ken Simonson, chief economist for the Associated General Contractors of America in a news release.
“Despite a large number of project announcements by the federal government, much of the money has yet to be awarded in construction contracts, let alone work in progress,” Simonson said in the statement. “At the same time, major private categories are growing more slowly or shrinking.”
For example, spending on commercial construction, such as retail and warehouse projects, fell 1% in October and has remained around 9.7% over the past 12 months. Manufacturing construction spending also fell 0.1% in October, the data showed.
But there are signs of optimism for the coming months, Basu said.
“The effects of these storms on construction spending dynamics should largely dissipate by the end of the year,” Basu said. “With most contractors expecting their sales to increase over the next six months, according to ABC’s construction confidence index, there are reasons to expect non-residential construction spending to pick up in the coming months.” .
