Nonresidential construction spending slips 0.1 percent


Following a 2 percent surge in August, nonresidential  construction spending – which includes both privately and publicly financed  construction – slipped 0.1 percent in September to a seasonally adjusted annual  rate of $550.9 billion, according to the November report by the U.S. Census  Bureau. Year-over-year, total nonresidential construction spending is down 1.3  percent,  reports Associated  Builders and Contractors Chief Economist Anirban Basu.

“The construction spending data is consistent with the  outlook ABC has been putting forth for quite some time,” said  Basu. “The notion is that  nonresidential construction spending is poised for a decline in the months ahead  as publicly financed construction wanes and is not fully offset by an increase  in privately financed construction

Private nonresidential construction spending was up 0.3  percent for the month and is 7.4 percent higher from one year ago. Public  nonresidential construction spending decreased 0.4 percent for the month and is  down 8.6 percent from the same time last.

One half of the sixteen nonresidential construction  subsectors posted increases for the month, including health care, up 2.2  percent; communication, 2.2 percent higher; sewage and waste disposal, up 1.8  percent; and lodging, up 1.7 percent. Three subsectors experienced increased  spending from one year ago with power construction spending up 19.3 percent;  commercial construction 9.7 percent higher; and manufacturing construction  spending up 4.7 percent.

Eight nonresidential construction subsectors had decreases in  spending for the month, including conservation and development, down 7.7  percent; public safety, 4.9 percent lower; water supply, down 2.4 percent; and  transportation, down 2.3 percent. With spending down in the majority of  nonresidential construction subsectors year-over-year, those posting the largest  declines include lodging, down 18.8 percent; religious, 16.7 percent lower;  sewage and waste disposal, down 13.1 percent; amusement and recreation, 12.3  percent lower; and water supply construction, down 12.1 percent.

“During the past few months, publicly financed construction  surged in part as a reflection of ongoing federal stimulus spending,” Basu said. “However, as federally financed projects end in larger numbers, publicly  financed construction is expected to dip.

“This appears to be what occurred in September. Many of the  segments experiencing the largest declines in nonresidential construction were  those heavily financed and demanded by the public sector,” said Basu. “In  contrast, privately financed construction continues to expand, such as  commercial and manufacturing construction.

“Industry stakeholders can expect continued growth in health  care construction for demographic and policy reasons, as well as in  communications construction for reasons related to new technology and customer  demand,” Basu said.  Read More.