The U.S. Census Bureau reported that total construction spending during July 2020 was estimated at a seasonally adjusted annual rate of $1,364.6 billion, 0.1% (±1.2%) above the revised June estimate of $1,362.8 billion. The July figure is 0.1% (±1.6%) below the July 2019 estimate of $1,366.0 billion.
During the first seven months of this year, construction spending amounted to $792.6 billion, 4.0% (±1.2%) above the $761.9 billion for the same period in 2019.
In July, the estimated seasonally adjusted annual rate of public construction spending was $351.1 billion, 1.3% (±2.0%) below the revised June estimate of $355.6 billion. Highway construction was at a seasonally adjusted annual rate of $99.0 billion, 3.1% (±5.9%) below the revised June estimate of $102.1 billion. Educational construction was at a seasonally adjusted annual rate of $82.2 billion, 3.0% (±1.8%) below the revised June estimate of $84.7 billion. Transportation facilities also contracted by 1.6%.
Private construction spending was at a seasonally adjusted annual rate of $1,013.5 billion, 0.6% (±0.5%) above the revised June estimate of $1,007.2 billion.
- Residential construction was at a seasonally adjusted annual rate of $546.6 billion in July, 2.1% (±1.3%) above the revised June estimate of $535.6 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $466.9 billion in July, 1.0% (±0.5%) below the revised June estimate of $471.6 billion.
“The dichotomy between slumping nonresidential projects – both public and private – and robust homebuilding seems sure to widen as the pandemic continues to devastate state and local finances and much of the private sector,” said Associated General Contractors of America Chief Economist Ken Simonson. “Without new federal investments in infrastructure and other measures to boost demand for nonresidential construction, contractors will be forced to let more workers go.”
“There are two primary countervailing forces influencing the trajectory of nonresidential construction spending,” said Associated Builders and Contractors Chief Economist Anirban Basu. “The first is a force for good and involves the reopening of the economy and associated rebound in overall economic activity. Despite the lingering pandemic, third-quarter GDP growth is likely to be quite strong. All things being equal, this would tend to strengthen business for contractors.
“However, the second force at work is not benign and appears to be the stronger of the two,” said Basu. “The crisis has resulted in tighter project financing conditions, battered state and local government finances, substantial commercial vacancy and uncertainty regarding the future of key segments, such as office and lodging. And while backlog was strong at the start of the year, contractors indicate that it is now declining rapidly, in part due to abundant project cancellations.”
“Next year is shaping up to be an especially harsh one for many contractors, especially as some are already indicating that they are nearing the end of their backlog,” said Basu. “The wild card, as is often the case, is Congress. Another stimulus package could go a long way toward improving the trajectory of overall nonresidential construction spending, particularly one with a sizable infrastructure component. The upshot is that declines in nonresidential construction spending are likely even in the context of broader economic recovery.”