Steel Markets

Construction Spending Declines for a Fourth Month

August 4, 2020

Construction spending fell for the fourth straight month to a seasonally adjusted annual rate of $1.36 trillion in June, according to an analysis of data by the Associated General Contractors of America.

Public construction dipped 0.7 percent in June led by a 2.7 percent decline in educational construction and a 1.7 percent drop in highway and street construction.

Private nonresidential construction gained 0.2 percent, benefiting from increased spending in power construction, manufacturing construction and office construction. Increases were partially offset by a 1.3 percent drop in commercial construction spending (retail, warehouse and farm structures).

Private residential construction spending slid 1.5 percent as single-family homebuilding hit its lowest level since late 2016. Spending on single-family homes plunged 3.6 percent, while multifamily construction rose 3.0 percent, posting a third month of increases.

State and local governments are facing budget deficits that will postpone or delay infrastructure and other construction projects, said AGC.

“Regrettably, the overall downward trend in spending is likely to continue and to spread to more project types as work that began before the pandemic hit finishes up,” said Ken Simonson, the association’s chief economist. “Unless the federal government invests heavily—and promptly—in infrastructure projects, both public and private nonresidential investment are likely to shrink further.”