Construction Forecasts

News & Analysis

Nonresidential Building Construction Down Slightly in March

05/22/2012 by Bernard M. Markstein, RCD US Chief Economist

Nonresidential building construction spending slipped 0.1% at a seasonally adjusted (SA) rate in March after falling 0.7% in February. On a year-to-date not seasonally adjusted (NSA) basis, spending increased 9.6% compared to the same period in 2011.

“For lease” private projects spending rose 0.9% (SA) in March after falling 2.6% in February. Year-to-date for lease spending increased 6.4% compared to the same period a year ago. Lodging and office construction spending surged 5.9% and 3.2%, respectively, while retail construction fell 1.8%, down for the second month in a row. Comparing the year-to-date totals to the same period a year earlier, hotel construction spending rose 1.3%, office construction spending advanced 1.8%, and retail construction spending jumped 11.5%.

Construction spending for institutional projects dropped 1.2% after falling a slight 0.1% in February. On a year-to-date basis, spending was up 4.4% compared to the same period a year earlier. None of the categories in this group advanced for the month. However, on a year-to-date basis all of these categories were up compared to the same period in 2011, except religious construction spending, which was down 8.3%.

Manufacturing construction spending continued to be strong, increasing 2.0% in March after advancing 1.1% in February. Manufacturing spending has risen in 12 of the previous 14 months. Year-to-date spending soared 42.5% compared to the same period last year.

The Forecast
The chief risks to the construction spending forecast include the continuing problems in Europe (with current focus on Greece, Spain, and France), the threat (which at the moment appears to be lessening) of significantly higher oil prices for a sustained period, and Washington gridlock (already largely factored in, but never count out the ability for our political representatives to make the situation worse than expected). Despite these risks, RCD’s forecast is for spending totals to strengthen throughout 2012 and 2013 as the economy grows, companies expand in response to rising demand, and some producers move production from overseas back to the United States. Low long-term interest rates continue to be a positive for investment in plant and equipment. Increasing domestic demand and greater exports to Asia and South America are expected to more than offset the likely slowdown in exports to Europe.

The forecast is for nonresidential construction spending to increase 5.1% in 2012 and to improve further in 2013, advancing 7.8%.

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

  Monthly Figures*
(latest actual values)
3-Month
Moving Average
Actual Forecast
  Jan-12 Feb-12 Mar-12 Jan-12 Feb-12 Mar-12 2008 2009 2010 2011 2012 2013
For Lease 89.097 86.778 87.576 88.340 87.772 87.817 190.581 131.476 89.424 86.606 89.072 96.435
  Month-over-Month
  % Change
1.9% -2.6% 0.9% 1.1% -0.6% 0.1%            
  Year-over-year
  % Change (NSA)
7.9% 6.3% 4.9%       3.8% -31.0% -32.0% -3.2% 2.8% 8.3%
     Lodging 8.639 8.496 9.001 8.653 8.549 8.712 35.806 25.499 11.329 8.538 9.050 9.889
  1.5% -1.7% 5.9% 0.7% -1.2% 1.9%            
  0.8% 0.1% 2.9%       24.7% -28.8% -55.6% -24.6% 6.0% 9.3%
     Office 34.907 33.665 34.746 34.958 34.392 34.439 68.563 51.908 37.573 34.478 35.265 38.497
  0.9% -3.6% 3.2% 0.6% -1.6% 0.1%            
  2.0% 2.0% 1.5%       5.1% -24.3% -27.6% -8.2% 2.3% 9.2%
     Commercial
     (mainly retail)
45.551 44.617 43.829 44.729 44.831 44.666 86.212 54.069 40.522 43.590 44.757 48.050
  2.8% -2.1% -1.8% 1.5% 0.2% -0.4%            
  15.0% 11.5% 8.4%       -3.9% -37.3% -25.1% 7.6% 2.7% 7.4%
Institutional 157.691 157.573 155.694 157.106 157.409 156.986 193.929 187.430 161.391 154.315 157.328 166.055
  0.5% -0.1% -1.2% 0.7% 0.2% -0.3%            
  6.3% 7.1% 0.9%       8.1% -3.4% -13.9% -4.4% 2.0% 5.5%
     Health Care 41.059 41.483 41.290 40.875 41.244 41.277 46.902 44.845 39.879 39.966 42.007 45.704
  -0.3% 1.0% -0.5% 2.0% 0.9% 0.1%            
  9.2% 8.9% 3.4%       7.2% -4.4% -11.1% 0.2% 5.1% 8.8%
     Education 85.844 85.228 84.377 85.828 85.509 85.150 104.890 103.202 88.227 84.678 84.749 88.359
  0.5% -0.7% -1.0% -0.1% -0.4% -0.4%            
  4.8% 6.1% -0.4%       8.4% -1.6% -14.5% -4.0% 0.1% 4.3%
     Religious 3.972 4.210 4.117 3.883 4.028 4.100 7.225 6.192 5.208 4.135 4.162 4.462
  1.8% 6.0% -2.2% -0.6% 3.7% 1.8%            
  -17.1% -0.9% -6.0%       -4.2% -14.3% -15.9% -20.6% 0.7% 7.2%
     Public Safety 10.666 10.931 10.515 10.603 10.762 10.704 13.083 13.787 11.118 9.993 10.540 10.672
  -0.2% 2.5% -3.8% 3.2% 1.5% -0.5%            
  11.3% 14.4% 6.9%       28.3% 5.4% -19.4% -10.1% 5.5% 1.3%
     Amusement/
     Recreation
16.150 15.721 15.395 15.916 15.865 15.755 21.829 19.404 16.959 15.543 15.870 16.858
    -2.7% -2.1% 0.6% -0.3% -0.7%            
  6.0% 2.8% -0.8%       2.9% -11.1% -12.6% -8.3% 2.1% 6.2%
Manufacturing 43.459 43.923 44.820 43.340 44.251 44.067 53.234 56.836 38.106 37.191 45.830 52.398
  -4.2% 1.1% 2.0% 2.0% 2.1% -0.4%            
  46.3% 42.4% 39.3%       31.0% 6.8% -33.0% -2.4% 23.2% 14.3%
Total** 290.247 288.274 288.090 288.786 289.432 288.870 437.744 375.742 288.921 278.112 292.231 314.888
  0.2% -0.7% -0.1% 1.0% 0.2% -0.2%            
  11.2% 10.9% 6.9%       8.4% -14.2% -23.1% -3.7% 5.1% 7.8%

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


Email

RSS Feed

» return to previous page
11686

Member Comments

Post Your Own Comments 
» Not a member? Register now to become one. Otherwise, login to post your comments on this article.

click here to update your log-in and member information

click here to maintain your company profile & view metrics

Join accessArchitecture Now!
accessArchitecture members get free pre-design leads in exchange for providing project information
Keep Up To Date with eNewsletters
Keep up to date with our variety of complimentary weekly and monthly eNewsletters covering the construction industry.