Nonresidential construction spending slipped 1% in September but has still managed to expand 4.2% on a year-over-year basis, according to the Nov. 1 release from the U.S. Census Bureau. Spending for the month totaled $596.1 billion on a seasonally adjusted, annualized basis while the government slightly revised the August spending figure from $603.7 billion to $601.9 billion.
“September’s drop in nonresidential construction spending is disappointing, given the growing momentum in the broader economy and the generally positive signals being sent by industry-specific leading economic indicators,” said Associated Builders and Contractors Chief Economist Anirban Basu.
“Based on a combination of these leading indicators—including ABC’s own Construction Backlog Indicator and the Architecture Billings Index—and the anticipated performance of the U.S. economy, nonresidential construction spending should re-establish an upward trajectory on a seasonally adjusted basis going forward.
“With national job creation accelerating recently and interest rates remaining ultra low, one would expect private construction to perform well during the quarters ahead, while growth in publicly funded spending will be much softer,” said Basu. “The industry should be further buoyed by the economy's two consecutive quarters of respectable economic growth, something the U.S. economy has rarely achieved during the current recovery.”
Only five of 16 nonresidential construction subsectors posted increases in spending in September on a monthly basis.
• Office-related construction spending grew 2.4% in September and is up 15.7% from the same time a year ago.
• Lodging construction spending is up 4.7% on a monthly basis and is up 14.7% on a year-over-year basis.
• Conservation and development-related construction spending grew 4.1% for the month and is up 31.7% on a yearly basis.
• Commercial construction spending gained 1.3% for the month and has grown 12.3% on a year-over-year basis.
• Spending in the water supply category expanded 1.1% on a monthly basis but is down 1.6% for the year.
Spending in 11 nonresidential construction subsectors declined in September.
• Amusement and recreation-related construction spending lost 0.8% in September but is up 0.6% from the same time last year.
• Manufacturing-related spending fell 1.3% on a monthly basis but is up 16.4% on a year-over-year basis.
• Communication construction spending declined 0.7% for the month and is down 12.8% from the same time last year.
• Religious spending fell 3.1% for the month but is up 2.6% from the same time last year.
• Sewage and waste disposal-related construction spending declined 2.4% for the month but has expanded 1.1% on a 12-month basis.
• Health care-related construction spending fell 0.9% for the month and is down 7.5% on a yearly basis.
• Education-related construction spending fell 0.1% for the month but is up 7.1% on a year-over-year basis.
• Construction spending in the transportation category fell 1.1% on a monthly basis but has expanded by 1.2% on an annual basis.
• Highway and street-related construction spending fell 3.6% in September and is down 1.7% compared to the same time last year.
• Public safety-related construction spending lost 2.3% on a monthly basis and is down 11.1% on a year-over-year basis.
• Power construction spending fell 3.1% for the month, but is 2% higher than at the same time a year ago.