Marcum Commercial Construction Index reports industry outlook has shifted; more change expected

Overall nonresidential construction spending in September totaled $690.5 billion, down a slight 0.7 percent from a year earlier.

November 30, 2016 |

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The Marcum Commercial Construction Index highlights the continued spending weakness in nonresidential construction during the first nine months of the year and points to a significant anticipated change beginning in 2017. The change is being attributed to the major infrastructure-led stimulus package expected from the new Presidential administration. The national Construction Industry Practice group of Marcum LLP, a top national accounting and advisory firm, produces the quarterly index.

Overall nonresidential construction spending in September totaled $690.5 billion, down a slight 0.7 percent from a year earlier. Of the category’s 16 subsectors, bright spots included Office-related spending, which registered a whopping 23% gain to $70.7 billion; Lodging, up 20% year-over-year to $28.8 billion; Commercial construction, with a 6% gain to $71.7 billion; Amusement & Recreation, up 3.5% to $21.4 billion; and Educational construction, at $87.1 billion, a 3.3% percent increase. 

The remaining 11 nonresidential subsectors all recorded fall-offs for the month, with the greatest declines in Sewage & Waste Disposal (-18.8%), Water Supply (-13.7%), Communication (-12.6%) and Transportation (-11.3%).

“Most construction firms report intense difficulty securing electricians, heating/cooling professionals, welders and carpenters, among others,” says Anirban Basu, Marcum’s Chief Construction Economist, in a press release. The construction worker unemployment rate in October was less than half of what it was five years ago, down to 5.7 % from 13.7 % in the same month of 2011. This compares to a national unemployment rate of 4.9% at the end of the 2016 third quarter.

Looking ahead, the Marcum report predicts that a stimulus package will put pressure on wages and inflation and lead to higher interest rates, which in turn will eventually hurt construction spending. “After a period of relatively intense construction spending due in part to a stimulus package, the nonresidential sector could face a sharp slowdown in construction spending thereafter,” it states.

For the complete Marcum Commercial Construction Index, visit www.marcumllp.com/industries/construction.

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