Nonresidential construction spending fell 0.5% from March to April and is down 3.9% compared with April 2020, according to www.abc.org.
For public construction, spending decreased 0.5% for the month and 2.6% year-to-date. Private nonresidential spending fell 0.5% from March to April and is down 4.8% year-to-date.
Associated Builders and Contractors Chief Economist Anirban Basu said the decline is not surprising, in part because of the “historic lag between broader economic recovery and the onset of persistent recovery in nonresidential construction.” However, he says new challenges also have emerged.
“Conventional wisdom holds that many of the projects postponed during the earlier stages of the pandemic are set to come back to life,” Basu said. “It is for this reason that many contractors have reported rising backlog and growing confidence in the six-month outlook for revenues, staffing levels and profits, according to ABC’s latest Construction Backlog Indicator and Construction Confidence Index. But just when it seemed safe to get back into the water, a new set of challenges has emerged. Among these are input shortages, rapidly rising materials prices and ongoing issues securing sufficiently skilled workers. What all this has done is to suppress the vigor of nonresidential construction’s current recovery by inducing certain project owners to further delay their projects, hoping to ultimately receive more favorable bids.
“As if this were not enough, certain construction segments may have been permanently undermined by the pandemic,” Basu continued. “Among these are construction of new office buildings, shopping centers and hotels that cater to business travelers. The good news is that the longer-term outlook remains upbeat given the anticipated strength of the economic recovery to come, particularly if a sensible infrastructure package manages to make its way out of Washington, D.C.”
