Nonresidential construction spending slipped in August, according to an Oct. 1 release from the U.S. Census Bureau. Nonresidential construction spending shrank 1.2 percent on a monthly basis in August, but has still managed to expand 6 percent on a year-over-year basis. Spending for the month totaled $603.7 billion on a seasonally adjusted, annualized basis. The government also revised the July spending figure down from $617.8 billion to $611.3 billion.
“This is why it is never a good idea to get excited about one month of data,” said Associated Builders and Contractors Chief Economist Anirban Basu. “After a significant acceleration in spending in July, August’s report depicts a steady but unspectacular recovery. Based on various industry surveys, including ABC’s own confidence and backlog indicators, the steady pace of recovery will continue.
“Macroeconomic fundamentals remain promising for growth moving forward,” said Basu. “Job growth has been reasonably steady during the past 12 months and the quality of jobs added to the economy has improved during the course of the current year, which helps explain the ongoing recovery in office-related spending. Federal Reserve policy remains accommodative and interest rates remain benign, which will help support business investment, including in construction, going forward. Consumer spending also should help prompt additional construction, including in the lodging and amusement/recreation categories.”
Seven of 16 nonresidential construction subsectors posted increases in spending in August on a monthly basis.
- Office-related construction spending grew 1.1 percent in August and is up 18.9 percent from the same time one year ago.
- Manufacturing-related spending grew 1.7 percent on a monthly basis and is up 14.5 percent on an annual basis.
- Lodging construction spending is up 0.9 percent on a monthly basis and is up 10.2 percent on a year-over-year basis.
- Amusement and recreation-related construction spending grew 0.9 percent on a monthly basis and is up 3 percent from the same time last year.
- Communication construction spending expanded 3.4 percent for the month, but is down 10.5 percent on a year-over-year basis.
- Religious spending grew 0.9 percent for the month and is up 1.4 percent from the same time last year.
- Sewage and waste disposal-related construction spending gained 0.8 percent for the month and has grown 3.5 percent on a 12-month basis.
Spending in nine nonresidential construction subsectors declined in August.
- Conservation and development-related construction spending fell 2.5 percent for the month, but is up 19.8 percent on a yearly basis.
- Health care-related construction spending fell 0.6 percent for the month and is down 6.6 percent for the year.
- Education-related construction spending fell 2 percent for the month and is down 1.9 percent on a year-over-year basis.
- Spending in the water supply category fell 4 percent from July and is 1.8 percent lower than at the same time last year.
- Construction spending in the transportation category fell 2.9 percent on a monthly basis, but has expanded 3 percent on an annual basis.
- Highway and street-related construction spending fell 0.6 percent in August and is down 0.2 percent compared to the same time last year.
- Public safety-related construction spending fell 5 percent on a monthly basis and is down 6 percent on a year-over-year basis.
- Power construction spending fell 3.4 percent for the month, but is 16.3 percent higher than at the same time one year ago.
- Commercial construction spending declined 3.1 percent in August, but is up 9.4 percent on a year-over-year basis.