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OUTLOOK GLOOMY HEADING INTO 2023

Construction Spending Dips

A confluence of factors, including inflation, supply chain issues, elevated borrowing costs, and historically high wages and materials costs have driven down construction spending levels during the latter parts of 2022.

In the United States, nonresidential construction spending fell 0.3 percent in October and is up just 9.2 percent year over year.  Importantly, those figures aren’t adjusted for inflation, and construction input costs are up significantly over the past year; in inflation-adjusted terms, nonresidential construction spending is in decline. Nonresidential activity has held up slightly better in Canada, where spending increased 2.4 percent in September and is up double digits since September 2021.

While the private sector has struggled in the face of economic weakness, publicly financed nonresidential construction spending, buoyed by excess pandemic relief funds and the U.S. infrastructure package, has outpaced overall spending on both a monthly and yearly basis.

Click here to download this month’s full economic update
(which discusses: construction spending, inflation, supply chain, manufacturing, materials prices, labor, and a potential recession.)