Nonresidential construction spending dipped 1 percent in June and has now contracted for three consecutive months according to analysis of U.S. Census Bureau data released today by Associated Builders and Contractors (ABC). Nonresidential spending, which totaled $682 billion on a seasonally adjusted, annualized rate, has fallen 1.1 percent on a year-over-year basis, marking the first time nonresidential spending has declined on an annual basis since July 2013.
“On a monthly basis, the numbers are not as bad as they seem, as May’s nonresidential construction spending estimate was revised higher. However, this fails to explain the first year-over-year decline in nearly three years,” says ABC Chief Economist Anirban Basu.
“Thanks in part to the investment of foreign capital in America, spending related to office space and lodging are up by more than 16 percent year-over-year,” says Basu. The global economy is weak, and international investors are searching for yield and stability. U.S. commercial real estate has become a popular destination for foreign capital. However, the weakness of the global economy may also help explain the decline in manufacturing-related construction spending of nearly 5 percent for the month and more than 10 percent year-over-year.
Consumer spending is the only significant driver of economic growth in America right now and public sector spending does not look like it will accelerate in the near future, despite a federal highway bill that was pasted last year, Basu explains.
Precisely half of the 16 nonresidential subsectors expanded in June. Two of the largest subsectors—manufacturing and commercial—experienced significant contractions in June, however, and were responsible for a majority of the dip in spending.
Tepid spending by public agencies also continues to shape the data. Despite a monthly pick-up in spending, water-supply construction spending is down 14 percent on a year-over-year basis. Public safety construction spending is down 8.4 percent from a year ago, sewage and waste disposal by nearly 15 percent, highway and street by about 6 percent, education by 4 percent and transportation by more than 3 percent.
Related Stories
Industry Research | Mar 22, 2017
Progress on addressing US infrastructure gap likely to be slow despite calls to action
Due to a lack of bipartisan agreement over funding mechanisms, as well as regulatory hurdles and practical constraints, Moody’s expects additional spending to be modest in 2017 and 2018.
Industry Research | Mar 21, 2017
Staff recruitment and retention is main concern among respondents of State of Senior Living 2017 survey
The survey asks respondents to share their expertise and insights on Baby Boomer expectations, healthcare reform, staff recruitment and retention, for-profit competitive growth, and the needs of middle-income residents.
Industry Research | Mar 14, 2017
6 ways cities can prepare for a driverless future
A new report estimates 7 million drivers will shift to autonomous vehicles in 3 U.S. cities.
Office Buildings | Mar 7, 2017
Large creative office projects generate staggering returns for property investors
A new Transwestern report examines the adaptive reuse trend across the U.S.
Industry Research | Mar 7, 2017
These are the 10 most expensive cities in the world to build in
Paris, Frankfurt, and Macau are all on the list, but none of them are more expensive than the city in the number one spot.
Office Buildings | Mar 2, 2017
White paper from Perkins Eastman and Three H examines how design can inform employee productivity and wellbeing
This paper is the first in a planned three-part series of studies on the evolution of diverse office environments and how the contemporary activity-based workplace (ABW) can be uniquely tailored to support a range of employee personalities, tasks and work modes.
Industry Research | Feb 15, 2017
Putting workers first should be every employer’s priority
The latest Sodexo report on workplace trends explores 10 factors that are impacting the global work environment.
Industry Research | Feb 13, 2017
How thought leadership marketing can generate referrals for your firm
The most effective way to boost your reputation is through thought leadership marketing.
Market Data | Feb 1, 2017
Nonresidential spending falters slightly to end 2016
Nonresidential spending decreased from $713.1 billion in November to $708.2 billion in December.
High-rise Construction | Jan 23, 2017
Growth spurt: A record-breaking 128 buildings of 200 meters or taller were completed in 2016
This marks the third consecutive record-breaking year for building completions over 200 meters.
