The U.S. Census Bureau announced that total construction spending during December 2020 was estimated at a seasonally adjusted annual rate of $1,490.4 billion, 1.0% (± 0.8%) above the revised November estimate of $1,475.6 billion.
The December figure is 5.7% (±1.0%) above the December 2019 estimate of $1,410.3 billion.
The value of construction in 2020 was $1,429.7 billion, 4.7% (±1.0%) above the $1,365.1 billion spent in 2019.
Spending on private construction was at a seasonally adjusted annual rate of $1,137.6 billion, 1.2% (±0.7%) above the revised November estimate of $1,124.4 billion.
- Residential construction was at a seasonally adjusted annual rate of $691.0 billion in December, 3.1% (±1.3%) above the revised November estimate of $670.1 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $446.6 billion in December, 1.7% (±0.7%) below the revised November estimate of $454.4 billion.
The value of private construction in 2020 was $1,079.3 billion, 4.7% (±0.8%) above the $1,030.7 billion spent in 2019. Residential construction in 2020 was $607.6 billion, 11.6% (±2.1%) above the 2019 figure of $544.4 billion and nonresidential construction was $471.7 billion, 3.0% (±0.8%) below the $486.3 billion in 2019.
In December, the estimated seasonally adjusted annual rate of public construction spending was $352.8 billion, 0.5% (±1.3%) above the revised November estimate of $351.1 billion.
Highway construction was at a seasonally adjusted annual rate of $98.4 billion, 0.9% (±3.5%) above the revised November estimate of $97.5 billion. Educational construction was at a seasonally adjusted annual rate of $90.2 billion, 0.6% (±1.5%) above the revised November estimate of $89.7 billion.
The value of public construction in 2020 was $350.5 billion, 4.8% (±1.6%) above the $334.4 billion spent in 2019. Highway construction was $98.8 billion, 1.8% (±4.1%) above the $97.1 billion in 2019, while educational construction in 2020 was $87.3 billion, 3.6% (±3.3%) above the 2019 figure of $84.3 billion.
“Private nonresidential construction has declined for six months in a row, and the slide is accelerating,” said Ken Simonson, Associated General Contractors of America chief economist. “While some categories of public construction have held up so far, state and local budget problems are likely to drive a downturn in public project starts in the next few months.”
Association officials said commercial construction was likely to suffer amid weakening demand unless Congress and the Biden administration enact new recovery measures, including backfilling local construction budgets and passing new infrastructure funding. They said the new federal investments were needed to sustain construction employment levels in many parts of the country until private sector demand recovers.
“Even as they work out details on the latest coronavirus relief plan, Congress and the Biden administration need to start work on measures to rebuild the economy and recover lost jobs,” said Stephen E. Sandherr, the association’s chief executive officer. “One of the most effective ways to help the newly unemployed will be to rebuild aging infrastructure and maintain state and local construction budgets.”
“The slump in nonresidential construction spending has now persisted for several months,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Leading indicators are not promising, including ABC’s Construction Backlog Indicator, which remains 1.5 months lower than in December 2019. The pandemic has ravaged commercial real estate fundamentals, and this sector will likely remain weak for years to come due to behavioral shifts caused by the COVID-19 pandemic. That weakness will limit the initial pace of private construction spending recovery in a number of key segments, even as the pandemic fades in the rearview mirror.
“Given weakened state and local government finances, public construction’s trajectory is not especially promising either,” said Basu. “Near-term spending growth is partially a reflection of what had been a strong economy pre-pandemic and the improvement in public finances that accompanied the lengthiest economic expansion in America’s history. Backlog was plentiful coming into the crisis, and that continues to be reflected in public spending data. Emergency construction spending has also boosted spending as decision-makers look to expand the capacity of healthcare delivery in the near-term.
“While it is true that the broader economy is poised for rapid economic recovery later this year, nonresidential construction is positioned to lag,” said Basu. “This is often the case given the tighter lending standards and the higher commercial vacancy rates that accompany periods of economic stress. However, the lag in industry recovery could be even lengthier this time around as the specter of remote work threatens the office market, online meeting platforms interfere with recovery in business travel, and more people shop from home as opposed to on Main Street and in malls. The implication is that absent a meaningful federal stimulus package, many nonresidential construction firms and their workers will face a period of vulnerability.”