Construction spending nudges higher in April

ConDig (01-Jun–22).  Construction spending in the US edged up 0.2% in April to a seasonally adjusted annual rate $1.755 trillion compared with $1.41 trillion the month prior as a drop in nonresidential spending was outweighed by a rise in the residential sector, according to latest figures from the Commerce Department.

National nonresidential construction spending was down 0.4% in April to a seasonally adjusted annualized total of $844.4 billion.

Spending was down on a monthly basis in 12 of the 16 nonresidential subcategories. Private nonresidential spending was down 0.2%, while public nonresidential construction spending was down 0.7% in April. 

Spending in the residential category managed to continue its upward trajectory in April, rising 0.9% for the month to $900 billion and is 18.2% higher since April 2021. 

“Despite upbeat contractor sentiment, nonresidential construction spending has been sliding during recent months,” said ABC chief economist Anirban Basu. 

“The situation is even worse given that construction spending is measured in nominal terms, and therefore does not account for rapidly rising materials prices and compensation costs that have, according to ABC’s Construction Confidence Index, put downward pressure on profit margins.”

But he said that despite of the overall decline in nonresidential construction spending, there were reasons to remain upbeat.

“A number of segments hammered by the pandemic showed signs of life in April, with spending in both the lodging and amusement/recreation categories increasing on a monthly basis. Construction related to manufacturing also continues to rise as suppliers desperately strive to keep up with demand and reshoring momentum persists,” he added.