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Nonresidential Building Construction Spending Slips in September

0 1638 Market Intelligence

Nonresidential building construction spending fell a slight 0.1% in September following a 1.3% increase in August. On a year-to-date basis, the measure was down 6.7% compared to the same period a year ago. “For lease” private projects fell 0.8% following a 2.0% decline in August. There have now been three months of falling expenditures following four months of increases.

Nonresidential building construction spending fell a slight 0.1% in September following a 1.3% increase in August. On a year-to-date basis, the measure was down 6.7% compared to the same period a year ago. “For lease” private projects fell 0.8% following a 2.0% decline in August. There have now been three months of falling expenditures following four months of increases. Construction spending for institutional projects eked out a 0.1% increase following a 2.2% rise in August, leaving the measure at its highest level since September of last year.

Concern over the economic outlook is acting as a drag on nonresidential construction spending. With the economic outlook improving somewhat, spending totals will hold their own in the fourth quarter of this year and strengthen throughout 2012 and 2013. Construction activity in the near term will be limited to some extent by commercial developers who will slow construction on some projects already started and delay some projects scheduled to start because of dimmer prospects for profit when buildings are completed. Offsetting this will be continued low long-term interest rates for those who can obtain funding. We expect continued evidence of economic strength to spur some additional spending by firms.

For 2011, nonresidential spending is projected to decline 4.5%. Improvement occurs in 2012 with 5.1% growth forecast and accelerating into 2013 with 8.3% growth.

U.S. Nonresidential Construction
(billions of U.S. current dollars)

  Monthly Figures*
(latest actual values)
3-Month
Moving Average
Actual Forecast
  Jul-11 Aug-11 Sep-11 Jul-11 Aug-11 Sep-11 2008 2009 2010 2011 2012 2013
Lodging 8.387 8.407 8.546 8.496 8.529 8.447 35.806 25.499 11.329 8.516 8.904 9.784
  Month-over-Month % Change -4.6% 0.2% 1.7% 0.7% 0.4% -1.0%            
  Year-over-year % Change (NSA) -23.8% -24.5% -18.8%       24.7% -28.8% -55.6% -24.8% 4.6% 9.9%
Office 34.172 34.155 34.093 34.693 34.594 34.140 68.563 51.908 37.573 34.180 36.008 39.728
  -3.6% 0.0% -0.2% 0.7% -0.3% -1.3%            
  -4.7% -4.1% -9.0%       5.1% -24.3% -27.6% -9.0% 5.3% 10.3%
Commercial (mainly retail) 46.032 44.816 43.988 45.043 45.447 44.945 86.212 54.069 40.522 43.405 45.724 49.263
  1.2% -2.6% -1.8% 3.5% 0.9% -1.1%            
  18.2% 9.6% 9.9%       -3.9% -37.3% -25.1% 7.1% 5.3% 7.7%
Health Care 41.635 40.815 41.709 40.875 41.348 41.386 46.902 44.845 39.879 40.379 42.913 46.718
  0.1% -2.0% 2.2% 1.9% 1.2% 0.1%            
  3.3% 1.1% 0.4%       7.2% -4.4% -11.1% 1.3% 6.3% 8.9%
Education 84.366 87.750 87.375 84.005 85.741 86.497 104.890 103.202 88.227 84.683 86.732 91.403
  -0.9% 4.0% -0.4% 0.4% 2.1% 0.9%            
  -6.9% -1.5% -3.3%       8.4% -1.6% -14.5% -4.0% 2.4% 5.4%
Religious 4.007 4.203 4.244 3.987 4.011 4.151 7.225 6.192 5.208 4.236 4.283 4.591
  4.8% 4.9% 1.0% -1.6% 0.6% 3.5%            
  -21.7% -14.1% -16.5%       -4.2% -14.3% -15.9% -18.7% 1.1% 7.2%
Public Safety 9.606 10.167 9.672 9.948 10.017 9.815 13.083 13.787 11.118 9.863 10.224 11.020
  -6.5% 5.8% -4.9% -0.7% 0.7% -2.0%            
  -10.7% -4.0% -9.6%       28.3% 5.4% -19.4% -11.3% 3.7% 7.8%
Amusement/Recreation 15.452 15.550 15.714 15.560 15.445 15.572 21.829 19.404 16.959 15.570 16.415 17.551
  0.8% 0.6% 1.1% 2.3% -0.7% 0.8%            
  -11.0% -13.1% -12.5%       2.9% -11.1% -12.6% -8.2% 5.4% 6.9%
Manufacturing 36.070 37.373 37.491 36.137 37.293 36.978 53.234 56.836 38.106 35.143 38.774 43.935
  -6.2% 3.6% 0.3% 3.0% 3.2% -0.8%            
  -3.5% 3.7% 3.9%       31.0% 6.8% -33.0% -7.8% 10.3% 13.3%
Total 279.727 283.236 282.832 278.744 282.425 281.932 437.744 375.742 288.921 275.976 289.977 313.992
  -1.6% 1.3% -0.1% 1.5% 1.3% -0.2%            
  -2.7% -1.1% -2.4%       8.4% -14.2% -23.1% -4.5% 5.1% 8.3%

*Monthly figures are seasonally adjusted at annual rates (SAAR figures).
Source: Census Bureau, U.S. Department of Commerce. Forecast: Reed Construction Data.

by Bernie Markstein

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