News

Nonresidential Building Construction Spending Down in June

0 2561 Market Intelligence

Nonresidential building construction spending was down 1.7% at a seasonally adjusted (SA) rate in June after increasing 0.7% in May. On a year-to-date not seasonally adjusted (NSA) basis, nonresidential building construction spending was 2.3% lower than the same period in 2012. The May spending number was revised up by $6.3 billion—2.2% of the previously reported spending number. That was enough to change the month from a decrease to an increase.

Nonresidential building construction spending was down 1.7% at a seasonally adjusted (SA) rate in June after increasing 0.7% in May. On a year-to-date not seasonally adjusted (NSA) basis, nonresidential building construction spending was 2.3% lower than the same period in 2012. The May spending number was revised up by $6.3 billion—2.2% of the previously reported spending number. That was enough to change the month from a decrease to an increase.

“For lease” private projects spending dropped 2.4% (SA) in June after rising 0.8% in May. Year-to-date for lease NSA spending was up 2.8% compared to the same period in 2012. Construction spending for lodging decreased 1.1% in June following four consecutive monthly increases. At the same time, lodging construction spending was revised up 1.6% for April and 3.4% for May from their previously reported values.

Office construction spending rose 0.8% following a 0.4% decline in May. Retail construction spending went into reverse, plunging 5.1% in June following a 1.0% increase in May. Retail spending for May was originally reported as a 2.5% drop, but was revised up by $1.8 billion, or 3.9% of the previously reported number. On a year-to-date NSA basis, lodging spending was 22.2% higher, office construction spending was 2.6% lower, and retail construction spending was 2.6% higher than the same period in 2012.

Construction spending for institutional projects has been choppy for well over a year. In June, spending fell 1.0% following a 1.5% rise in May. Year-to-date, NSA institutional spending was 7.3% lower than the same period in 2012. Only health care and amusement/recreation construction spending were up for the month, +1.0% and +0.4%, respectively. On a year-to-date basis, all of the categories for the group were down from 2012.

Manufacturing construction spending fell for the third month in a row, down 2.1% in June. One slight positive is that May’s spending number was revised up by $2.1 billion, reducing the month’s decline from the previously reported -8.1% to -1.7%. Even with the recent declines in spending, year-to-date NSA manufacturing construction spending was 3.8% higher than the same period in 2012.

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

  Monthly Figures (1)
(latest actual values)
3-Month Moving Average Year-to-Date (NSA)
  Apr-13 May-13 Jun-13 Apr-13 May-13 Jun-13 Jan-12 to
Jun-12
Jan-13 to
Jun-13
For Lease 97.5 98.3 96.0 97.6 97.8 97.3 45.6 46.9
  Month-over-Month
  % Change
0.0% 0.8% -2.4% 0.8% 0.2% -0.5%    
  Year-over-year
  % Change (NSA)
2.7% 3.7% 0.4% 3.3% 2.9% 2.2% 10.4% 2.8%
     Lodging 13.7 14.2 14.0 13.0 13.6 14.0 5.4 6.6
  6.8% 3.2% -1.1% 6.2% 4.5% 2.8%    
  21.4% 22.3% 22.7% 22.2% 20.4% 22.1% 22.1% 22.2%
     Office 36.4 36.2 36.5 37.2 36.8 36.4 18.4 17.9
  -3.4% -0.4% 0.8% -1.1% -1.1% -1.1%    
  -3.0% -2.8% -3.4% -3.1% -2.8% -3.1% 8.3% -2.6%
     Commercial
     (mainly retail)
47.4 47.9 45.4 47.4 47.4 46.9 21.8 22.4
  0.9% 1.0% -5.1% 1.0% 0.0% -1.1%    
  2.7% 4.3% -1.8% 4.0% 3.2% 1.7% 9.6% 2.6%
Institutional 144.1 146.2 144.7 145.9 144.8 145.0 74.9 69.5
  0.0% 1.5% -1.0% -0.7% -0.7% 0.2%    
  -6.2% -5.8% -9.9% -7.0% -6.8% -7.3% 2.1% -7.3%
     Health Care 40.6 41.2 41.6 40.6 40.6 41.1 20.6 20.0
  1.7% 1.3% 1.0% 0.1% 0.0% 1.3%    
  -2.9% -3.5% -2.4% -3.9% -3.7% -2.9% 6.3% -3.2%
     Education 76.4 77.6 76.2 78.4 77.1 76.7 40.1 36.6
  -1.2% 1.6% -1.8% -1.3% -1.7% -0.5%    
  -7.9% -7.0% -13.2% -7.7% -8.1% -9.6% 2.3% -8.8%
     Religious 3.5 3.6 3.3 3.7 3.7 3.5 1.9 1.7
  -10.1% 2.5% -6.8% -1.4% -0.9% -5.0%    
  -6.6% -3.3% -12.4% -6.1% -4.1% -7.5% -10.7% -6.7%
     Public Safety 9.7 10.0 9.6 9.4 9.6 9.7 5.2 4.6
  5.3% 2.8% -3.8% 1.4% 1.8% 1.3%    
  -6.8% -6.0% -7.1% -13.0% -9.5% -6.6% 5.1% -10.9%
     Amusement/
     Recreation
13.9 13.9 14.0 13.7 13.8 13.9 7.2 6.6
  1.6% 0.3% 0.4% -0.5% 0.7% 0.8%    
  -5.6% -8.1% -6.7% -8.1% -7.1% -6.8% -7.3% -8.0%
Manufacturing 47.5 46.6 45.7 48.2 47.7 46.6 22.0 22.9
  -3.2% -1.7% -2.1% -0.4% -1.0% -2.4%    
  3.6% -0.5% -3.1% 5.8% 3.3% -0.1% 30.7% 3.8%
Total (2) 289.1 291.2 286.3 291.7 290.3 288.9 142.5 139.2
  -0.5% 0.7% -1.7% -0.1% -0.5% -0.5%    
  -1.7% -2.0% -5.5% -1.7% -2.1% -3.2% 8.4% -2.3%

(1) Monthly figures are seasonally adjusted at annual rates (SAAR figures).
(2) Total may not equal the sum of its components due to rounding.
Source: Census Bureau, U.S. Department of Commerce. Calculations: Reed Construction Data

The Forecast
Although Reed Economics believes that nonresidential construction spending will soon turn higher, that will not be enough to save the year. The nonresidential construction spending forecast for 2013 is for a 2.4% decline. The forecast for 2014 is for an increase of 4.6%.

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

  Actual Forecast
  2009 2010 2011 2012 2013 2014
For Lease 131.5 88.9 88.5 96.2 98.0 104.2
   Year-over-year % Change -31.0% -32.4% -0.5% 8.6% 1.9% 6.3%
     Lodging 25.5 11.6 9.1 11.4 13.8 15.6
-28.8% -54.4% -21.5% 25.1% 20.9% 12.8%
     Office 51.9 37.9 36.0 38.4 37.2 39.7
  -24.3% -27.1% -4.9% 6.7% -3.3% 6.7%
     Commercial (mainly retail) 54.1 39.5 43.4 46.3 47.1 49.0
-37.3% -27.0% 10.0% 6.7% 1.6% 4.1%
Institutional 187.4 161.1 155.8 155.5 145.9 149.5
  -3.4% -14.0% -3.3% -0.2% -6.1% 2.4%
     Health Care 44.8 39.3 40.2 41.8 41.5 44.7
-4.4% -12.3% 2.2% 4.0% -0.8% 7.7%
     Education 103.2 88.4 85.0 84.6 77.3 76.3
  -1.6% -14.3% -3.9% -0.4% -8.6% -1.3%
     Religious 6.2 5.3 4.2 3.8 3.5 3.5
-14.3% -14.6% -19.8% -11.1% -5.8% -1.4%
     Public Safety 13.8 11.2 10.4 10.3 9.6 10.0
5.4% -19.1% -6.7% -1.1% -6.8% 4.6%
     Amusement/Recreation 19.4 16.9 16.0 15.0 14.0 15.0
-11.1% -12.7% -5.6% -6.4% -6.6% 7.0%
Manufacturing 56.8 40.4 39.7 46.9 47.4 51.1
  6.8% -29.0% -1.7% 18.1% 1.2% 7.7%
Total (1) 375.7 290.4 284.0 298.5 291.4 304.8
-14.2% -22.7% -2.2% 5.1% -2.4% 4.6%

(1) Total may not equal the sum of its components due to rounding.
Source: Census Bureau, U.S. Department of Commerce. Forecast: Reed Construction Data.

by Bernie Markstein

Leave a comment

Or register to be able to comment.