Construction spending slips but 1 sector shines

Dive Brief:

Nonresidential construction spending ticked down 0.3% in April to a seasonally adjusted annual rate of $1.2 trillion, according to Associated Builders and Contractors’ analysis of U.S. Census Bureau data.
After a revision flipped March’s 0.2% increase into a decline, April marked the second consecutive month of reduced construction spending in 2024, said Anirban Basu, ABC chief economist.
Despite these declines, the country’s manufacturing boom continues to support overall spending levels, keeping nonresidential spending up 11.5% over the past 12 months, according to the report. The manufacturing segment gained 0.9% in April and has jumped more than 17% over the past 12 months.

Dive Insight:

“An unprecedented increase in manufacturing construction spending has pushed overall nonresidential activity 31.9% higher over the past two years,” said Basu. “Ongoing investment in industrial facilities as well as significant infrastructure-related outlays will keep nonresidential spending elevated despite the current expectation that interest rates will stay higher for longer.”

Nonresidential construction spending remains strong compared to a year ago, according to Census Bureau data. Over the past 12 months, private nonresidential spending jumped 8.3%, while public nonresidential spending soared 16.7%.

But private sector nonresidential spending continued to post mixed results month to month, said Ken Simonson, chief economist for the Associated General Contractors of America. The category declined 0.3% in April, after a 0.2% drop in March.

For example, commercial construction fell 1.1% in April and remains virtually unchanged from a year ago. The sector’s overall growth is largely due to the largest private segment, manufacturing construction, gaining 0.9% in April and more than 17% over the past 12 months.

“Overall spending slipped despite upturns in manufacturing and power construction,” said Simonson. “Most public segments continued a seesaw pattern, with decreases in April following gains in other recent months.”

Ten of the 16 nonresidential categories posted a monthly decrease in April, according to the Census Bureau. Following manufacturing, spending on transportation and water supply both jumped 0.5% in April. On the other hand, construction spending on lodging and healthcare projects decreased 1.6% and 2.4%, respectively, according to the data.