WASHINGTON, May 3—National nonresidential construction spending declined 1.1% in March, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau. On a seasonally adjusted annualized basis, nonresidential spending totaled $778.5 billion for the month.

Spending was down on a monthly basis in 11 of the 16 nonresidential subcategories. Private nonresidential spending was down 0.9%, while public nonresidential construction spending fell 1.5% in March.

“While the longer-term outlook for nonresidential construction is superb, the pandemic is lingering, creating much damage to commercial real estate fundamentals,” said ABC Chief Economist Anirban Basu. “The lodging, office and commercial segments experienced declines in spending in March. Office vacancy rates are elevated in many markets, and the industry experienced negative net absorption. The trials and tribulations of hotel operators, retailers and restauranteurs are also well known. Private nonresidential construction spending is down more than 9% from March 2020.

“Public construction spending was weak in March and is down more than 5% on a year-over-year basis,” said Basu. “While large-scale federal infrastructure outlays are likely in the future, that money has yet to arrive. State and local government finances have generally held up far better than many had predicted earlier in the COVID-19 crisis, but many governments have had to spend significant operational sums to countervail the public health crisis and therefore had to redirect money away from infrastructure.

“ABC’s Construction Backlog Indicator has foreshadowed this state of affairs for months,” said Basu. “The most recent readings suggest that the construction spending recovery will be slow over the near-term. However, as the broader economic recovery picks up additional speed later this year with more pervasive vaccinations and re-openings, both private and public construction spending should begin to manifest more positive momentum later this year and into 2022.”