Nonresidential Construction Spending Dips 0.1% in November, Flat Year Over Year

National nonresidential construction spending declined 0.1% in November, according to an Associated Builders and Contractors (ABC) analysis of data published by the U.S. Census Bureau on Jan. 2. On a seasonally adjusted annualized basis, nonresidential spending totaled US$1.234 trillion. On a year-over-year basis, nonresidential construction spending is up 2.8%, approximately flat in inflation-adjusted terms.

Spending was down on a monthly basis in 8 of the 16 nonresidential subcategories. Private nonresidential spending was unchanged, while public nonresidential construction spending was down 0.2% in November.

“Contractor confidence surged post-election,” said Anirban Basu, ABC chief economist. “Many contractors expect a combination of deregulation and tax cuts to support greater activity and profitability going forward, including substantial investment in traditional energy sectors and manufacturing. Still, there are reasons for concern.”

“Nonresidential construction spending momentum has all but disappeared, despite an ongoing boom in data center construction (up 43% year over year), largely because project financing costs remain elevated,” he added. “With inflation remaining stubbornly high and potentially accelerating going forward, interest rates stand to stay higher for longer. Prospective tariff increases threaten to push construction materials prices higher, and shifting immigration policies could expand future worker shortages. Only time will tell whether the recent upswing in optimism will prove justified.”

Visit abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, plus analysis of spending, employment, job openings and the Producer Price Index.