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Manufacturing Tops Nonresidential Categories for Construction Spending Gains

Nonresidential U.S. construction spending posted historically strong numbers in 2022, and momentum is slower but steady early in 2023, according to government and industry data. The latest Commerce Department figures showed nearly $1.3 trillion was spent on construction of U.S. manufacturing projects during 2022, including new facilities, expansions and renovations. That was up about 34% from 2021 and the highest rate of annual improvement among all nonresidential categories. The accelerated pace was even more stark in the month of December, when construction spending rose 42% from December 2021 to more than $122 billion. Manufacturing projects are being spurred in part by the trend of several industries now “onshoring” and “reshoring” manufacturing and logistics to domestic locations, to avoid overseas supply chain disruptions rampant in the early months of the pandemic. It is being further fueled by government programs supporting domestic private production of computer chips, electric vehicles and EV batteries. Other categories with significant year-over-year spending gains included the rebounding lodging industry, which rose 36% for the month and 1% for the year; and the commercial category that includes retail and warehousing, up 23% for the month and 21% for the year. Momentum for nonresidential construction appears to be slowing early in 2023 but remains strong by historical measures. Industry data firm Dodge Construction Network reported this month that its nonresidential construction momentum index, gauging the volume of projects entering planning stages, fell 8.4% from December to January.

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Daisie Hobson

Daisie Hobson is a Director at the Reshoring Institute and an engineer with many years of experience in manufacturing and project management.

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