Non-Residential Construction Starts Grew Modestly in August

Washington, DC, October 2, 2024-The U.S. Census Bureau's non-residential construction results for August showed modest growth following very strong comps throughout 2023, reports Truist.

While a restatement in the prior year impacting May, June, July and August makes the results difficult to interpret. weak spots are starting to show in several areas with anecdotal commentary pointing toward project delays in many areas that are waiting for lower interest rates to flow through. Highway work has also seen only modest growth on tough comps and has also been impacted by weather. It seems as though this spending should pick up, but it could be in 2025.

The revised, unadjusted non-residential construction results have continued a positive trend since late 2021. These results include a gain of 4.3% in August, following 7.2% increase in July y/y. Despite significant recent revisions, the markets of non-residential are becoming much more mixed, with notable negatives developing. We provide the breakout by markets in the table below and note that prior year revisions result in more of a trend line than pinpoint a specific performance.

This market has struggled with limited growth off a strong year in 2023 and substantial weather impacts in 2024. Regardless, the lack of even sporadic upturns given stimulus money is concerning. The channel does not believe highway spending is at a top, but this issue bears watching.

Chart: Total Non-Residential Construction Spending Growth