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Nonresidential spending slips in August

Public sector spending is declining faster than the private sector.

October 04, 2016 |

Pixabay Public Domain

Nonresidential construction spending fell for a second consecutive month in August, according to analysis of U.S. Census Bureau released today by Associated Builders and Contractors (ABC). Nonresidential spending totaled $686.6 billion on a seasonally adjusted, annualized basis for the month, 1.1% lower than July’s total of $694.1 billion (revised down from $701 billion) and 1.3% below August 2015’s figure.

Private nonresidential construction spending fell just 0.4% for the month, while its public sector counterpart shrank 2%. Four of the five largest nonresidential subsectors—power, highway and street, commercial and manufacturing—combined to fall 2.2% on a monthly basis.

“While previous weak spending reports can almost completely be explained by diminished public construction spending, today’s report also revealed emerging weakness in private spending,” says ABC Chief Economist Anirban Basu.

However, spending has increased in some areas. Office-related construction increased 2% for the month and 24 percent on a year-over-year basis. Meanwhile, lodging-related construction spending increased 1.2% for the month and almost 16% year-over-year.

Other areas have underperformed. “Given the passage of a federal highway bill last year, one might have expected spending growth in the highway/street and transportation categories,” Basu says. “Those expectations have been unmet thus far. Transportation-related construction spending dipped by more than 6 percent in August and by more than 11 percent on a year-over-year basis. Highway and street spending is down by more than 8 percent on a year-ago basis, and was down nearly 3 percent for the month.”



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