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Dive Brief:
- National spending on non-residential construction it was down 0.1% in Novemberaccording to an analysis of Associated Builders and Contractors data released Thursday by the U.S. Census Bureau.
- On a seasonally adjusted annualized basis, non-residential spending totaled $1.23 trillion. On a year-over-year basis, non-residential construction spending is up 2.8%, roughly flat in inflation-adjusted terms.
- Spending fell monthly in eight of the 16 non-residential subcategories. Private non-residential spending was unchanged, while public spending on non-residential construction fell 0.2% in November.
Diving knowledge:
ABC Chief Economist Anirban Basu noted contractor confidence increased after the presidential elections of November 5.
“Many contractors expect a combination of deregulation and tax cuts to support increased activity and profitability going forward, including substantial investment in traditional energy sectors and manufacturing,” he said in the statement.
November data supports this idea. Manufacturing was one of the strongest sectors and one of three, along with public safety and water, to grow more than 10% year-over-year.
Public spending on construction decreased 0.1% for the month, but rose 4.6% over 12 months, according to a statement from the Associated General Contractors of America. Among the three largest public segments, highway and street construction rose 0.2% in November but fell 3.5% year-over-year, education construction fell 0.2% for the month, but rose 3.0% year-over-year and transportation spending declined 0.5% in November but rose 6.6% year-on-year. before
“Construction activity was broadly balanced between segments that expanded or contracted in November,” Ken Simonson, AGC’s chief economist, said in the statement. “But contractors appear to be optimistic about most categories heading into 2025.”
Still, there are reasons for concern. Despite the ongoing boom in data center construction, the momentum in non-residential construction spending has faded, largely because project financing costs remain high, Basu said.
“With inflation remaining stubbornly high and potentially accelerating in the future, interest rates will remain higher for longer. Future rate hikes threaten to push up building materials prices and policy change of immigration could widen future labor shortages,” he said. “Only time will tell if the recent upsurge in optimism will be justified.”
