ConDig (05-Jan–21). Construction spending edged up 0.9% in November to a seasonally adjusted annual rate of $1.46 trillion as an uptick in homebuilding offset a slump in nonresidential spending, according to latest figures from the Commerce Department.
Residential construction soared 2.6% as record low mortgage rates have sparked robust demand for housing despite the impact of ongoing economic lockdowns in certain areas of the country due to the lingering effects of the Covid-19 virus.
Private and public nonresidential spending fell 0.6% from October and 4.7% from a year earlier.
Private nonresidential construction spending fell for the fifth month in a row, sliding 0.8% from October to November and 9.5% from November 2019. The largest private nonresidential segment, power construction, dipped 0.9% for the month. Among the other large private nonresidential project types, commercial construction—comprising retail, warehouse and farm structures—edged down 0.3% for the month, manufacturing construction inched up 0.1%, office construction gained 0.3%, and healthcare construction tumbled 1.4%.
“Private nonresidential construction declined for the fifth-straight month in November, while public nonresidential spending slipped for the fifth time in the past six months,” said Ken Simonson, chief economist for the Associated General Contractors of America.
“Unfortunately, our latest survey finds contractors expect the volume of projects available to bid on in 2021 will be even more meager.”
The Association noted that demand for most types of nonresidential construction was likely to remain down for much of the year amid expectations of languishing government investment in infrastructure.
Public construction spending dipped 0.2% for the month but increased 3.1% year-over-year. There were decreases from October to November for most nonresidential categories, although the two largest segments rose: highway and street construction gained 1.8% for the month, while educational construction increased 0.3%.
Private residential construction spending increased for the sixth consecutive month, rising 2.7% in November. Single-family homebuilding surged 5.1% for the month, while residential improvements spending ticked up 0.2%. Multifamily construction spending was flat.