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Nonresidential construction spending falls in 13 of 16 segments in April

Market Data

Nonresidential construction spending falls in 13 of 16 segments in April

Dip in spending largely attributable to drops in highway and street and power segments. 


By Associated Builders and Contractors | June 2, 2017
Nonresidential construction spending falls in 13 of 16 Segments in April

Photo: Pixabay

Nonresidential construction spending fell 1.7% in April 2017, totaling $696.3 billion on a seasonally adjusted, annualized basis, according to analysis of U.S. Census Bureau data released today by Associated Builders and Contractors (ABC). 

In April, private nonresidential construction spending fell 0.6% for the month, but has increased 4.3% on a year-ago basis. Public nonresidential spending decreased by 3.4% and is down 4.2 % year-over-year. Declines in nonresidential construction spending for the month were largely attributable to drops in spending in the highway and street and power segments, down $3.5 billion and $2.1 billion, respectively.

“A staggering 13 of 16 nonresidential construction segments experienced spending declines in April,” said ABC Chief Economist Anirban Basu. “While poor weather interrupted a considerable amount of economic activity in the Northeast in March—which produced March’s weak jobs report, among other things—weather generally improved in April. This would normally suggest expansion in nonresidential construction spending in on a monthly basis; however, that is not reflected in the April data.

“Instead, public nonresidential construction spending continued to demonstrate substantial weakness with one noteworthy exception, water supply, which produced a small increase,” said Basu. “Among the private categories only office, which was flat, and commercial, which sustained only a small monthly decline, reported stable spending amounts. Both categories have seen a year-over-year spending expansion of 12.4%.

“There are a number of explanatory factors,” said Basu. “First, there are survey data from the Federal Reserve indicating that bank lending to commercial real estate has begun to tighten, perhaps because of growing fears of overbuilding in certain markets. Uncertainty at the federal agency level is also likely having an impact, including in public segments like highway and street that depend heavily on federal outlays. Finally, certain economic decision-makers may have ratcheted down their projections of economic growth in 2017 and 2018, resulting in more hesitation with respect to moving forward with projects at various stages of development.”

February’s initial estimate, which was revised higher last month, was revised lower this month. The revision translates into a decline of $9.6 billion, or 1.3%.  March’s value was relatively unchanged at around $708.6 billion.

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