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 |
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| 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). |
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Read more forecasts from Reed Construction Data:
Construction Spending Inches up in March
Heavy Engineering (Non-Building) Construction Spending Down for the Third Month in a Row
New Residential Construction Spending Continues to Improve
