National nonresidential construction spending declined 0.3 percent in July, according to an Associated Builders and Contractors analysis of U.S. Census Bureau data released today. Total nonresidential spending stood at $748.8 billion on a seasonally adjusted, annualized rate in July, an increase of 5.3 percent from the same time last year. Private nonresidential spending fell 1 percent in July, while public nonresidential spending expanded 0.7 percent.
“Construction spending dynamics have reversed almost completely during the past 12 to 18 months,” said ABC Chief Economist Anirban Basu. “Earlier in the cycle, private construction expanded briskly, driven in part by abundantly available financing at very low interest rates. While private construction volumes continue to be elevated, they are no longer expanding at quite the same rate. For instance, construction spending on lodging and office space barely budged for the month, while commercial construction, such as fulfillment and shopping centers, fell 3.3 percent.
“By contrast, nonresidential construction segments associated with large public components, including conservation and development, education, highway and street, public safety, and sewage and waste disposal all experienced an uptick in spending in July,” said Basu. “Many states are now running budget surpluses for the first time in years, in part due to surging capital gains tax collections. One result is that more public projects are moving forward. As evidence, construction spending in the water supply category is up 29 percent on a year-over-year basis, conservation and development (e.g. flood control) by 24 percent, transportation by nearly 21 percent, public safety-related spending by 17 percent and sewage and waste disposal by 11 percent.