The U.S. Census Bureau reported that construction spending during February 2021 was estimated at a seasonally adjusted annual rate of $1,516.9 billion, 0.8% (±0.7%) below the revised January estimate of $1,529.0 billion. The February figure is 5.3% (±1.0%) above the February 2020 estimate of $1,441.1 billion.
During the first two months of this year, construction spending amounted to $213.2 billion, 4.9% (±1.0%) above the $203.2 billion for the same period in 2020.
The estimated seasonally adjusted annual rate of public construction spending was $351.2 billion, 1.7% (±1.2%) below the revised January estimate of $357.4 billion. Highway construction was at a seasonally adjusted annual rate of $102.3 billion, 0.6% (±3.1%) below the revised January estimate of $103.0 billion. Educational construction was at a seasonally adjusted annual rate of $86.9 billion, 3.2% (±1.3%) below the revised January estimate of $89.8 billion.
Spending on private construction was at a seasonally adjusted annual rate of $1,165.7 billion, 0.5% (±0.7%) below the revised January estimate of $1,171.6 billion.
- Residential construction was at a seasonally adjusted annual rate of $717.9 billion in February, 0.2% (±1.3%) below the revised January estimate of $719.3 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $447.8 billion in February, 1.0% (±0.7%) below the revised January estimate of $452.3 billion.
“The downturn in February reflects both an unfavorable change from mild January weather and an ongoing decline in new nonresidential projects,” said Ken Simonson, Associated General Contractors of America’s chief economist. “Unfortunately, it will take more than mild weather to help nonresidential contractors overcome the multiple challenges of falling demand for many project types, steeply rising costs, and lengthening or uncertain delivery times for key materials.”
“We remain in the midst of the COVID-19 pandemic, which has shattered commercial real estate fundamentals,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “This too shall pass, but there continues to be downward pressure on nonresidential construction activity, and that was apparent in February, when weakness in spending was apparent in private and public segments alike.
“But past is not prologue in this instance,” said Basu. “America is about to experience a massive resurgence in economic growth as vaccinations proceed. Many ABC members report that backlog has already been climbing as projects that had been postponed earlier in the crisis come back to life. While some residual weakness may persist in the next few months, nonresidential construction spending is poised to stabilize during the summer and enter 2022 with substantial momentum, though some private construction segments will continue to lag.
“Consequently, the nature of the challenges facing contractors will shift dramatically during the months ahead,” said Basu. “While many contractors have indicated that demand for construction services has been among their leading sources of concern during the pandemic, by the end of this year, the greatest challenge for many will be securing a sufficient workforce with which to compete for and complete projects. This will likely be even more of an issue in 2022 and 2023 as the pace of economic recovery progresses.”