Nonresidential construction investment up 16.3 percent

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“The third quarter Gross Domestic Report (GDP) report puts any talk of an  imminent recession to rest for now,” said Associated Builders and Contractors  Chief Economist Anirban Basu. “Indeed, economic data released over the past  month have been surprisingly good.”

Nonresidential fixed investment jumped 16.3 percent in the third quarter of 2011  following a revised 9.2 percent increase in the previous quarter of this year,  according to the GDP report by the Department  of Commerce. Nonresidential fixed investment in structures increased for the  second straight quarter this year, up 13.3 percent in the third quarter  following a 22.6 percent increase in the second quarter. Fixed investment in  equipment and software expanded 17.4 percent last quarter following a 6.2  percent increase in the second quarter.

“The GDP report shows that a growing share of American  corporations are willing to spend money to spur top-line and bottom-line  expansion,” Basu said. “However, this does not signify that the nonresidential  construction industry is set to boom.

“Public sector support for construction services is likely to  be flat at best, and job growth remains halted and lending disciplined,” said  Basu. “But the overall economic outlook for the nonresidential construction  industry has improved materially over the past several weeks.

“Eventually, the investment in equipment software and  structures will trend late into expanded hiring. Capital and labor go together  and what the United States is now experiencing is acceleration in capital  formation,” said Basu.

“That, in turn, will help trigger more demand for  construction services, whether in the form of office buildings, apartments, or  shopping centers. In short, the improved outlook for the broader economy in 2012  signals more recovery for construction activities in 2013 than were contemplated  just a few weeks earlier,” Basu said.  Read More.

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