Nonresidential Construction Spending Dips in May

Less and less nonresidential construction subsectors are opening their wallets to projects — causing a continual decrease in spending. In a sign that the nation’s economic recovery continues to stumble, private nonresidential construction spending decreased 0.6 percent in May, according to the July 1 report by the U.S. Census Bureau. On a year-over-year basis, private nonresidential construction spending is down 24.8 percent. Total nonresidential construction spending — which includes both private and public — slipped 0.1 percent from last month and 15.2 percent from May 2009, and now stands at $571.7 billion.

“Construction spending growth, to the extent that it exists, continues to be the domain of publicly financed projects, particularly those attached to the stimulus package passed in February 2009,” said Anirban Basu, Associated Builders and Contractors (ABC) chief economist. “This is clearly apparent in the list of subsectors that continue to register year-over-year growth, such as conservation and development, transportation and highway and street.”

Eight of the 16 nonresidential construction subsectors increased spending for the month, including water supply, up 5.5 percent; religious-related construction, up 4.2 percent; and highway and street construction, up 2.7 percent. Five subsectors reported higher construction spending compared to May 2009, including conservation and development, up 23 percent; transportation, up 13.8 percent; and highway and street construction, up 5.6 percent.

In contrast, those subsectors that had decreases in construction spending in May include lodging, down 3.9 percent; amusement and recreation, down 2.5 percent; and transportation, down 2.3 percent. On a year-over-year basis, lodging is down 62.1 percent, office construction is down 33.8 percent, commercial construction is down 31.8 percent and manufacturing is down 31.4 percent.

Public nonresidential construction was up 0.4 percent for the month, but is still down 3.7 percent from one year ago. Residential construction spending fell 0.4 percent for the month of May, but was up 11.9 percent from the same time last year. Overall, total construction spending — which includes both residential and nonresidential — was down 0.2 percent from April 2010 and down 8 percent from May 2009.