The U.S. economy’s performance slowed in the first quarter of 2017, but nonresidential fixed investment expanded at an impressive 9.4 percent seasonally adjusted annual rate, according to analysis of U.S. Bureau of Economic Analysis data recently released by Associated Builders and Contractors (ABC).
Real gross domestic product (GDP) expanded 0.7 percent on a seasonally adjusted annualized rate during the first three months of the year. Despite the subdued growth, GDP has now expanded in every quarter over the past three years. Fourth quarter 2016 growth was revised upward from a 1.9 percent annual rate of expansion to a 2.1 percent annual rate.
This represents the best quarter for nonresidential fixed investment, a category closely aligned with construction and other forms of business investment, since the end of 2013 and ends more than a year of tepid nonresidential fixed investment growth. Investment in structures, a subcomponent of nonresidential fixed investment, expanded 22.1 percent for the quarter after contracting by 1.9 percent in the fourth quarter of 2016. The other two subcomponents of nonresidential fixed investment—equipment and intellectual property products—expanded at a 9.1 percent rate and a 2.0 percent rate, respectively.
“It was expected that first quarter GDP would indicate that the U.S. economy remained unable to generate a high rate of growth,” said ABC Chief Economist Anirban Basu in a release. “Many economic actors appear to have adopted a cautious attitude in an environment characterized by a considerable amount of policy uncertainty. The decline in defense expenditures is likely to be a surprise to many given recent discussions about supposed vast increases in defense outlays.
“The investment in nonresidential structures during the first three months of the year is particularly remarkable in an environment otherwise characterized as generating little economic growth,” said Basu. “Rather than adopt a wait-and-see attitude, developers appear to have acted with conviction, taking advantage of growing confidence among investors and other market participants to forge ahead with planned projects. While the new presidential administration has yet to implement even a small fraction of its pro-business agenda, the development community continues to express confidence in the administration’s ability to create the conditions necessary for a much more vibrant U.S. economy.
“The expectation is that the balance of the year will be associated with much more rapid growth,” said Basu. “Consumer spending should pick up after a weak first quarter, given accelerating wage increases and elevated levels of job security. Business spending is also likely to expand briskly, particularly if the Trump administration is able to make meaningful progress on the corporate and personal income tax front.”
Related Stories
Reconstruction & Renovation | Mar 28, 2022
Is your firm a reconstruction sector giant?
Is your firm active in the U.S. building reconstruction, renovation, historic preservation, and adaptive reuse markets? We invite you to participate in BD+C's inaugural Reconstruction Market Research Report.
Industry Research | Mar 28, 2022
ABC Construction Backlog Indicator unchanged in February
Associated Builders and Contractors reported today that its Construction Backlog Indicator remained unchanged at 8.0 months in February, according to an ABC member survey conducted Feb. 21 to March 8.
Industry Research | Mar 23, 2022
Architecture Billings Index (ABI) shows the demand for design service continues to grow
Demand for design services in February grew slightly since January, according to a new report today from The American Institute of Architects (AIA).
Codes and Standards | Mar 1, 2022
Engineering Business Sentiment study finds optimism despite growing economic concerns
The ACEC Research Institute found widespread optimism among engineering firm executives in its second quarterly Engineering Business Sentiment study.
Codes and Standards | Feb 24, 2022
Most owners adapting digital workflows on projects
Owners are more deeply engaged with digital workflows than other project team members, according to a new report released by Trimble and Dodge Data & Analytics.
Market Data | Feb 23, 2022
2022 Architecture Billings Index indicates growth
The Architectural Billings Index measures the general sentiment of U.S. architecture firms about the health of the construction market by measuring 1) design billings and 2) design contracts. Any score above 50 means that, among the architecture firms surveyed, more firms than not reported seeing increases in design work vs. the previous month.
Market Data | Feb 15, 2022
Materials prices soar 20% between January 2021 and January 2022
Contractors' bid prices accelerate but continue to lag cost increases.
Market Data | Feb 4, 2022
Construction employment dips in January despite record rise in wages, falling unemployment
The quest for workers intensifies among industries.
Market Data | Feb 2, 2022
Majority of metro areas added construction jobs in 2021
Soaring job openings indicate that labor shortages are only getting worse.
Market Data | Feb 2, 2022
Construction spending increased in December for the month and the year
Nonresidential and public construction lagged residential sector.