ACEC Market Insights: Construction Growth Softening

Recently, the US Census released the results of its monthly Value of Construction Put in Place Survey. The survey provides estimates of the total dollar value of construction work done in the U.S. This data includes design and construction spending for public and private projects.

The seasonally adjusted annual rate of $2.1 trillion for May 2024 represents a monthly decline of -0.1%. This would be the third consecutive month in a row with a decline in in the growth rate, however, the Census Bureau revised previous estimates upwards. The last time there were two consecutive months of decline was October, 2022.

Source: US Census Value of Construction Put in Place Survey July 1, 2024 release

The latest release shows a plateauing in total construction growth, inline with overall economic conditions softening. US GDP for the 1^st quarter of 2024 was revised downward to 1.3% from an initial reading of 1.6%.

Both the residential and nonresidential sectors saw month over month declines of 0.2 and 0.1 respectively. This is the second consecutive month over month decline for nonresidential projects.

Source: US Census Value of Construction Put in Place Survey July 1, 2024 release

With respect to year over year growth in individual markets, manufacturing continues to be a top area for design & construction spending with total year to date (YTD) spending of $91.6b.

For the sectors with the lowest levels of growth, several categories are experiencing decline including lodging and commercial. These sectors and office are all sensitive to interest rate levels and reflect the impact borrowing costs have had on land development for these sectors.

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Top Construction (Public & Private) Year to Date Project Growth by Classification

Project Classification	YTD Spending Jan – May 2023 (millions)	YTD Spending Jan – May 2024 (millions)	Percent Change	Absolute Change (millions)
Total Public safety	$5,213	$7,329	40.6%	$2,116
Total Manufacturing	$72,160	$91,596	26.9%	$19,436
Total Religious	$1,389	$1,686	21.4%	$297
Total Water supply	$10,216	$11,769	15.2%	$1,553
Total Highway and street	$42,534	$48,377	13.7%	$5,843

 

 

Bottom Construction (Public & Private) Year to Date Project Growth by Classification

Project Classification	YTD Spending Jan – May 2023 (millions)	YTD Spending Jan – May 2024 (millions)	Percent Change	Absolute Change (millions)
Total Commercial	$57,142	$51,400	-10.0%	-$5,742
Total Lodging	$9,948	$9,575	-3.7%	-$373
Total Conservation and development	$4,432	$4,394	-0.9%	-$38
Total Office	$40,016	$40,438	1.1%	$422
Total Transportation	$25,136	$25,490	1.4%	$354

Source: US Census Value of Construction Put in Place Survey, July 1, 2024 release (Not Seasonally Adjusted).