Construction spending during September 2019 was estimated at a seasonally adjusted annual rate of $1,293.6 billion, 0.5% (±1.0%) above the revised August estimate of $1,287.1 billion, according to the U.S. Census Bureau. The September figure is 2.0% (±1.8%) below the September 2018 estimate of $1,319.7 billion.
During the first nine months of this year, construction spending amounted to $968.7 billion, 2.2% (±1.2%) below the $990.2 billion for the same period in 2018.
In September, the estimated seasonally adjusted annual rate of public construction spending was $331.9 billion, 1.5% (±1.8%) above the revised August estimate of $327.2 billion.
Highway construction was at a seasonally adjusted annual rate of $98.0 billion, 2.6% (±4.4%) above the revised August estimate of $95.5 billion. Educational construction was at a seasonally adjusted annual rate of $78.9 billion, 3.1% (±1.8%) above the revised August estimate of $76.5 billion.
Among the three largest public categories, spending in the first nine months of 2019 climbed 9.3% compared to the same period in 2018 for highway and street construction spending, 1.0% for educational construction and 9.1% for transportation (airports, transit, rail and port) projects.
Spending on private construction was at a seasonally adjusted annual rate of $961.7 billion, 0.2% (±0.7%) above the revised August estimate of $959.9 billion.
- Residential construction was at a seasonally adjusted annual rate of $511.4 billion in September, 0.6% (±1.3%) above the revised August estimate of $508.4 billion.
- Nonresidential construction was at a seasonally adjusted annual rate of $450.3 billion in September, 0.3% (±0.7%) below the revised August estimate of $451.4 billion.
Private residential construction spending increased for the month but slid 7.9% year-to-date. Single-family homebuilding rose 1.3% from August to September, the third consecutive monthly gain, but fell 8.0% year-to-date. Spending on multifamily projects declined 0.7% for the month but was 5.9% higher year-to-date.
Private nonresidential spending decreased from August to September and decreased 0.6% year-to-date. Power construction (comprising electric power generation, transmission and distribution, plus oil and gas fields and pipelines climbed 5.5% year-to-date.
Associated General Contractors of America officials said that the uncertainty and increased prices that come from recent trade fights and a series of threatened and imposed tariffs appear to be undermining demand for many types of construction projects. They urged the Trump administration to quickly resolve outstanding trade disputes with China, the European Union and other countries.
“Resolving trade disputes and providing businesses with greater certainty about trade and tariff levels will help accelerate demand for new construction projects,” said Stephen E. Sandherr, the association’s chief executive officer. “The best way to make sure our economy continues to expand is to quickly resolve a series of trade disputes that have contributed to business uncertainty and likely held back many new development and construction projects.”
“Construction spending contracted in a number of private segments, including in the commercial and lodging categories,” said Associated Builders and Contractors Chief Economist Anirban Basu. “While it would be easy to attribute this to a slowing economy and/or growing concerns regarding the saturation of available space in certain private segments, there are also large-scale economic transformations playing a role. Commercial construction spending is down nearly 19%, as traditional retailers continue to contend with the growing presence and capabilities of e-commerce giants, while those in the lodging segment – which dipped in September and is essentially flat year-over-year – are increasingly competing with online platforms such as Airbnb.
“Meanwhile, public construction remains one of the strongest elements of the U.S. economy,” said Basu. “Spending in the water supply category surged nearly 6% in September and is up 20% on a year-over-year basis. Overall, public nonresidential construction is up nearly 7% over the past 12 months as state and local government finances enjoy their best health in more than a decade. While there were some declines on a monthly basis in certain public segments in September, year-over-year spending is up more than 6% in the highway/street category, by nearly 6% in the transportation segment and by nearly 9% in the public safety category.
“Leading indicators, including the Architecture Billings Index, continue to point toward sluggish growth or worse in private construction,” said Basu. “Public construction spending, by contrast, should remain a source of economic expansion during the months ahead, but the looming insolvency of the Highway Trust Fund must be addressed soon for momentum to persist. In September, nine of 16 nonresidential construction segments experienced a decline in spending, and there has been a negative trend in place since April. Accordingly, viewed from a high-level perspective, the outlook for nonresidential construction spending is becoming increasingly uncertain, though available data regarding backlog suggests that the industry will enter 2020 with residual momentum.”