Nonresidential construction spending fell 2.1% in April according to analysis of U.S. Census Bureau data released by Associated Builders and Contractors (ABC). Nonresidential spending totaled $688.2 billion on a seasonally adjusted, annualized rate.
Much like last month, the sting of a disappointing headline number was mitigated by upward revisions to the previous two months of data. March's estimate was revised from $695.7 billion to $702.6 billion, while February's estimate saw a 0.1% increase. March represents the first month in which spending exceeded $700 billion since March 2009.
"Nonresidential construction spending growth continues to struggle to maintain momentum," said ABC Chief Economist Anirban Basu. "The amount of nonresidential construction value put in place has expanded by just 2.5% over the past year, with private spending up 3.4% and public spending up just 1.4%. While many will primarily attribute this to a sluggish U.S. economy, one that has expanded by less than 1.5% during each of the last two completed calendar quarters, there are other factors at work.
"Lower materials prices are embodied in the value of completed work," said Basu. "Though commodity prices have been firming recently, commodity prices had been in decline for more than a year. Moreover, in some communities, nonresidential construction is facing severe constraints given an insufficient number of qualified workers. Both factors would tend to constrain the level of observed growth in nonresidential construction spending.
"There may also be growing skittishness among private developers, who have become increasingly concerned by possible overbuilding in commercial, office and lodging markets," warned Basu. "Both lodging and commercial construction spending dipped in April. This hesitancy is reflected in many ways, including in the Architectural Billings Index, which has struggled to consistently stand meaningfully above its threshold value of 50. Public spending also remains lackluster as many states deal with underfunded pensions and ballooning Medicaid costs."
Only five of 16 nonresidential construction sectors experienced spending increases in April on a monthly basis:
- Religious-related spending expanded 9.6% from March 2016 and 7.3% from April 2015.
- Spending in the public safety category grew 5.2% on a monthly basis but fell 6.2% on a yearly basis.
- Office-related spending expanded 1.6% for the month and 20.3% for the year.
- Amusement and recreation-related spending expanded 0.8% month-over-month and 8.3% year-over-year.
- Spending in the power category rose by 0.3% for the month and 0.6% from April 2015.
Spending in 11 of the nonresidential construction subsectors fell in April on a monthly basis:
- Spending in the communication category fell 7.7% from March 2016 and is down 16.4% from April 2015.
- Highway and street-related spending fell 6.5% on a monthly basis but is up 4% on a yearly basis.
- Commercial-related spending dipped 3.7% for the month but is up 6.8% from April 2015.
- Spending in the health care category fell 3% from March 2016 and is down 0.6% from the same month one year ago.
- Educational-related spending dropped 2.4% month-over-month but is up 5.4% year-over-year.
- Spending in the lodging category fell 2% on a monthly basis but is up 24.6% on a yearly basis.
- Transportation-related spending fell 1.7% since March 2016 and is down 1% from April 2015.
- Sewage and waste disposal-related spending fell 1.4% for the month but is up 1% from April 2015.
- Manufacturing-related spending fell 1.4% month-over-month and 9.8% year-over-year.
- Spending in the conservation and development category dipped 1.2% for the month and 6.5% year-over-year.
- Water supply-related spending fell 0.5% on a monthly basis and 6.5% on a yearly basis.
Related Stories
Industry Research | Nov 30, 2016
Multifamily millennials: Here is what millennial renters want in 2017
It’s all about technology and convenience when it comes to the things millennial renters value most in a multifamily facility.
Market Data | Nov 29, 2016
It’s not just traditional infrastructure that requires investment
A national survey finds strong support for essential community buildings.
Industry Research | Nov 28, 2016
Building America: The Merit Shop Scorecard
ABC releases state rankings on policies affecting construction industry.
Multifamily Housing | Nov 28, 2016
Axiometrics predicts apartment deliveries will peak by mid 2017
New York is projected to lead the nation next year, thanks to construction delays in 2016
Market Data | Nov 22, 2016
Construction activity will slow next year: JLL
Risk, labor, and technology are impacting what gets built.
Market Data | Nov 17, 2016
Architecture Billings Index rebounds after two down months
Decline in new design contracts suggests volatility in design activity to persist.
Market Data | Nov 11, 2016
Brand marketing: Why the B2B world needs to embrace consumers
The relevance of brand recognition has always been debatable in the B2B universe. With notable exceptions like BASF, few manufacturers or industry groups see value in generating top-of-mind awareness for their products and services with consumers.
Industry Research | Nov 8, 2016
Austin, Texas wins ‘Top City’ in the Emerging Trends in Real Estate outlook
Austin was followed on the list by Dallas/Fort Worth, Texas and Portland, Ore.
Market Data | Nov 2, 2016
Nonresidential construction spending down in September, but August data upwardly revised
The government revised the August nonresidential construction spending estimate from $686.6 billion to $696.6 billion.
Market Data | Oct 31, 2016
Nonresidential fixed investment expands again during solid third quarter
The acceleration in real GDP growth was driven by a combination of factors, including an upturn in exports, a smaller decrease in state and local government spending and an upturn in federal government spending, says ABC Chief Economist Anirban Basu.