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Dive brief:
- National non-residential Construction spending rose 0.3% in September on a seasonally adjusted annualized basis of $1.1 trillion, according to a new analysis by Associated Builders and Contractors.
- After a rotated review Fall of 0.2% in May to a 0.9 percent increase, the September jump now marks the 16th consecutive month of expansion, driven mainly by publicly funded construction, said Anirban Basu, ABC’s chief economist.
- “While some private categories such as energy, commercial and leisure and recreation saw healthy month-over-month increases, publicly funded construction accounted for more than 72% of September’s increase” , Basu said. “Given the increase in federal infrastructure spending and the exorbitant financing costs for private construction, this momentum should remain strong over the coming months.”
Diving knowledge:
The largest non-residential segments were shown mixed results from August to September, according to the Associated General Contractors of America construction spending report.
Commercial construction, which includes warehouse and retail projects, rose 0.7% in September, the AGC report said. Meanwhile, investment in energy, oil and gas projects increased by 0.9%, while spending on education projects also increased by 1.8%.
But manufacturing-related spending fell 0.4 percent, while spending on highways and streets also fell 0.1 percent, the AGC report said.
“It is encouraging that most construction categories, including home building, are growing,” said Ken Simonson, AGC’s chief economist. “But the numbers would be even more impressive if the industry didn’t have so many unfilled job vacancies.”
However, even with the fall in construction spending related to the manufacturing industry, which had been a highlight of spending growthBasu said contractors still remain confident.
“Despite a small decline in spending in September, manufacturing construction remains the best performer in the non-residential sector,” Basu said in the statement. “Expenditure in the category has increased by 62% over the last year and represents almost 43% of the year-on-year increase in non-residential construction implemented. With several ongoing industrial megaprojectsspending in the manufacturing segment will remain elevated for several quarters.”
Spending increased monthly in 7 of 16 non-residential subcategories, led by commercial, electrical and educational construction, according to ABC. Non-residential private spending rose 0.1%, while non-residential public spending rose 0.5%.
