Construction Forecasts

News & Analysis

Nonresidential Building Construction Spending Recovery Slows

08/24/2011 by Jim Haughey, RCD Chief Economist

Nonresidential construction spending increased 2% since January; the recovery was clearly underway for “for lease” private projects with spending up for five consecutive months although spending for institutional projects has fallen below the January level. The economic outlook will dampen the nonresidential recovery but will not halt it. Spending totals will stall in the second half of 2011 and then resume growing, but at a slower pace than previously expected. Commercial developers 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. Institutional project managers will be forced to slow work or delay starts in 2012 as the flow of construction funds drops in a weaker economy.

The spending decline for 2011 is projected at a slightly larger 8.3% with the expansion in 2012 now expected to be 3.3% (previously 8.9%) and the gain in 2013 now expected to be 9.5% (previously 13.3%).

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

  Monthly Figures*
(latest actual values)
Annual Figures
  Actual Forecast
  May-11 Jun-11 2009 2010 2011 2012 2013
Lodging (% change is period versus
same period, previous year)
8.273 8.419 25.458 11.467 8.393 8.793 9.655
-28.7% -26.1% -28.9% -55.0% -26.8% 4.8% 9.8%
Office 32.908 32.930 52.868 37.514 34.140 37.8 42.275
  -12.0% -11.1% -22.7% -29.0% -9.0% 10.7% 11.8%
Commercial (mainly retail) 42.673 43.476 55.421 40.935 42.005 44.063 46.850
  1.5% 5.5% -35.9% -26.1% 2.6% 4.9% 6.3%
Health Care 38.944 39.879 45.151 40.081 39.631 41.688 46.2375
  -1.5% 0.4% -3.6% -11.2% -1.1% 5.2% 10.9%
Education 82.255 79.672 102.874 87.839 80.631 78.475 83.975
  -6.7% -9.1% -1.7% -14.6% -8.2% -2.7% 7.0%
Religious 4.196 3.963 6.227 5.322 4.137 3.970 4.259
  -23.4% -27.8% -13.9% -14.5% -22.3% -4.0% 7.3%
Public Safety 10.085 10.277 14.129 11.885 10.131 10.800 12.1375
  -18.3% -16.8% 8.0% -15.9% -14.8% 6.6% 12.4%
Amusement/Recreation 14.988 14.522 18.885 16.940 14.843 15.425 16.525
  -7.3% -15.4% -13.6% -10.3% -12.%4 3.9% 7.1%
Manufacturing 33.291 34.651 58.702 38.949 32.878 34.5 39.725
  -18.4% -11.9% 10.6% -33.6% -15.6% 4.9% 15.1%
Total 267.613 267.789 379.715 290.931 266.789 275.513 301.639
  -8.8% -8.1% -13.2% -23.4% -8.3% 3.3% 9.5%

*Monthly figures are seasonally adjusted at annual rates (SAAR figures).
Actuals: U.S. Census Bureau (Department of Commerce) (put-in-place investment figures).
Forecasts and table: Reed Construction Data.


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