Construction Spending Levels Off in November as Nonresidential Activity Slows
Construction spending remained flat in November, reflecting a lack of momentum across both private and public sectors. This stagnation underscores ongoing challenges in the construction industry, particularly within the nonresidential segment.
Flat Month-Over-Month Growth
Total construction spending was unchanged in November following a modestly revised 0.5 percent increase in October. Private construction showed a marginal gain of 0.1 percent, while public construction dipped by 0.1 percent. Year-over-year, construction spending was up 3.0 percent, indicating some growth but at a subdued pace.
Residential Construction Offers Limited Support
Residential construction managed a 0.1 percent increase in November, driven primarily by a 0.3 percent rise in new single-family construction. However, this was tempered by a 1.3 percent decline in new multifamily construction, reflecting a slowdown in that segment.
Nonresidential construction, on the other hand, presented a mixed picture. Private nonresidential spending remained flat, with manufacturing spending slipping by 0.1 percent. Public nonresidential spending also fell by 0.2 percent, dragged down by a 0.27 percent decline in educational construction.
Key Takeaways
The November report highlights a lack of significant drivers for construction spending. While residential activity, particularly in single-family housing, provided a slight boost, it was not enough to offset weakness in multifamily and nonresidential sectors.
Public construction, which often serves as a stabilizing force during periods of economic uncertainty, saw declines in educational and broader nonresidential spending, further dampening overall growth.
Looking Ahead
The muted activity in nonresidential construction could signal caution among businesses and public entities amid an uncertain economic backdrop. Rising interest rates and higher material costs may also be contributing factors, placing additional pressure on both private and public construction efforts.
Going forward, the industry may look toward potential policy-driven investments in infrastructure and manufacturing, particularly with support from initiatives like the CHIPS and Science Act, to provide a boost. However, without significant acceleration in these areas, construction spending is likely to remain subdued in the near term.