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.
Related Stories
Market Data | Oct 24, 2016
New construction starts in 2017 to increase 5% to $713 billion
Dodge Outlook Report predicts moderate growth for most project types – single family housing, commercial and institutional building, and public works, while multifamily housing levels off and electric utilities/gas plants decline.
High-rise Construction | Oct 21, 2016
The world’s 100 tallest buildings: Which architects have designed the most?
Two firms stand well above the others when it comes to the number of tall buildings they have designed.
Market Data | Oct 19, 2016
Architecture Billings Index slips consecutive months for first time since 2012
“This recent backslide should act as a warning signal,” said AIA Chief Economist, Kermit Baker.
Market Data | Oct 11, 2016
Building design revenue topped $28 billion in 2015
Growing profitability at architecture firms has led to reinvestment and expansion
Market Data | Oct 4, 2016
Nonresidential spending slips in August
Public sector spending is declining faster than the private sector.
Industry Research | Oct 3, 2016
Structure Tone survey shows cost is still a major barrier to building green
Climate change, resilience and wellness are also growing concerns.
Industry Research | Sep 27, 2016
Sterling Risk Sentiment Index indicates risk exposure perception remains stable in construction industry
Nearly half (45%) of those polled say election year uncertainty has a negative effect on risk perception in the construction market.
Market Data | Sep 22, 2016
Architecture Billings Index slips, overall outlook remains positive
Business conditions are slumping in the Northeast.
Market Data | Sep 20, 2016
Backlog skyrockets for largest firms during second quarter, but falls to 8.5 months overall
While a handful of commercial construction segments continue to be associated with expanding volumes, for the most part, the average contractor is no longer getting busier, says ABC Chief Economist Anirban Basu.
Designers | Sep 13, 2016
5 trends propelling a new era of food halls
Food halls have not only become an economical solution for restauranteurs and chefs experiencing skyrocketing retail prices and rents in large cities, but they also tap into our increased interest in gourmet locally sourced food, writes Gensler's Toshi Kasai.