Spending on construction increased slightly in October but was up 10.7% compared to October 2022. Nonresidential spending increased 20% over the 12 months, offsetting a minimal 0.9% decline in residential, according to an analysis by Associated Builders and Contractors.
Nonresidential spending increased in 8 of the 16 nonresidential sectors in October. Private nonresidential spending increased 0.1% in October, while public nonresidential construction spending was up 0.2%.
Construction spending, not adjusted for inflation, totaled $2.027 trillion at a seasonally adjusted annual rate in August, according to the Associated General Contractors of America. That figure is 0.5 percent above the September rate.
“Nonresidential construction spending increased for the 17th consecutive month in October and is now up an even 20% over the past year,” said Anirban Basu ABC chief economist. “As has been the case, more than 45% of that year-over-year increase is due to surging construction activity in the manufacturing sector, though infrastructure-related categories like highway and street and sewage and waste disposal have also outperformed.
“Spending in the commercial category, which includes construction of distribution and warehouse space, fell sharply in October,” said Basu. “This is likely due to a severe slowdown in the freight industry and slowing warehouse-related construction rather than a sudden decline in retail-related construction. Despite weakness in the commercial category and other headwinds like high interest rates and labor shortages, contractors remain optimistic about their sales over the next six months, according to ABC’s Construction Confidence Index.”