Nonresidential building construction spending edged down 0.1% at a seasonally adjusted (SA) rate in May, the same as in April. On a year-to-date not seasonally adjusted (NSA) basis, spending increased 10.1% compared to the same period in 2011.
“For lease” private projects spending rose 0.2% (SA) in May after advancing 0.3% in April. Year-to-date for lease spending increased 11.0% compared to a year ago. May lodging construction spending inched up 0.2% after falling 1.1% in April. May office construction spending dropped 1.5% after falling 0.5% the previous month. Retail construction spending powered up 1.5%, its third consecutive monthly increase, after rising an almost as strong 1.2% in April. On a year-to-date basis hotel construction spending jumped 23.0%, office construction spending advanced 3.6%, and retail construction spending rose 14.7%.
Construction spending for institutional projects decreased 1.5%, its fourth consecutive monthly decline. On a year-to-date basis, spending was up 3.0% from last year. Only two of the categories in this group increased in May—health care construction spending was up 1.4%, after increasing 1.6% in April, and public safety picked up 0.7% following a sharp 4.2% drop in April. However, on a year-to-date basis all of these categories were up compared to the same period in 2011 except religious and amusement/recreation construction spending, which were down 9.0% and 1.5%, respectively.
Manufacturing construction spending jumped 3.4% in May, after advancing 0.5% in April, which was originally reported as down 5.1%. This is also the fourth month in a row that manufacturing spending increased based on revised spending numbers (see http://www.reedconstructiondata.com/construction-forecast/news/2012/07/updating-history-revised-construction-spending-data-for-2010-12/ for fuller details on the revisions). Meanwhile, year-to-date spending was up a robust 37.9% compared to last year.
U.S. Nonresidential Construction | ||||||||
| Monthly Figures (1) (latest actual values) |
3-Month Moving Average | Year-to-Date (NSA) | ||||||
| Mar-12 | Apr-12 | May-12 | Mar-12 | Apr-12 | May-12 | Jan-10 to May-11 |
Jan-11 to May-12 |
|
| For Lease | 93.3 | 93.6 | 93.8 | 91.6 | 92.2 | 93.6 | 33.2 | 36.9 |
| Month-over-Month % Change |
3.9% | 0.3% | 0.2% | 0.9% | 0.8% | 1.4% | ||
| Year-over-year % Change (NSA) |
12.7% | 11.3% | 8.0% | -10.7% | 11.0% | |||
| Lodging | 11.1 | 11.0 | 11.0 | 10.1 | 10.6 | 11.1 | 3.6 | 4.4 |
| 15.2% | -1.1% | 0.2% | 3.8% | 4.5% | 4.3% | |||
| 27.2% | 31.9% | 28.7% | -33.3% | 23.0% | ||||
| Office | 35.8 | 35.6 | 35.1 | 35.1 | 35.2 | 35.5 | 13.6 | 14.1 |
| 4.4% | -0.5% | -1.5% | 0.6% | 0.4% | 0.8% | |||
| 5.3% | 5.2% | 1.1% | -14.1% | 3.6% | ||||
| Commercial (mainly retail) |
46.4 | 47.0 | 47.7 | 46.3 | 46.4 | 47.0 | 16.0 | 18.4 |
| 1.2% | 1.2% | 1.5% | 0.5% | 0.2% | 1.3% | |||
| 15.7% | 12.2% | 9.5% | 0.1% | 14.7% | ||||
| Institutional | 156.1 | 155.3 | 153.0 | 157.2 | 156.3 | 154.8 | 58.4 | 60.2 |
| -1.0% | -0.5% | -1.5% | -0.4% | -0.6% | -1.0% | |||
| 2.4% | 2.6% | 1.4% | -7.1% | 3.0% | ||||
| Health Care | 40.2 | 40.8 | 41.3 | 40.6 | 40.7 | 40.8 | 15.7 | 16.4 |
| -2.3% | 1.6% | 1.4% | -0.6% | 0.2% | 0.2% | |||
| 0.8% | 2.9% | 5.6% | -0.1% | 4.3% | ||||
| Education | 85.5 | 84.8 | 82.2 | 85.8 | 85.3 | 84.2 | 30.8 | 31.9 |
| -0.2% | -0.9% | -3.0% | 0.0% | -0.5% | -1.4% | |||
| 3.3% | 2.4% | -0.5% | -8.6% | 3.6% | ||||
| Religious | 4.0 | 3.9 | 3.6 | 4.1 | 4.0 | 3.8 | 1.7 | 1.6 |
| -1.4% | -3.1% | -8.2% | -0.7% | -2.4% | -4.2% | |||
| -7.8% | -7.6% | -14.2% | -19.9% | -9.0% | ||||
| Public Safety | 10.6 | 10.1 | 10.2 | 10.8 | 10.6 | 10.3 | 3.9 | 4.1 |
| -3.4% | -4.2% | 0.7% | -0.4% | -2.1% | -2.4% | |||
| 6.8% | 1.2% | 1.0% | -18.1% | 6.3% | ||||
| Amusement/ Recreation |
15.8 | 15.7 | 15.7 | 16.0 | 15.8 | 15.7 | 6.3 | 6.2 |
| 0.1% | -0.9% | -0.1% | -1.8% | -1.5% | -0.3% | |||
| -1.4% | -1.9% | -7.7% | -3.8% | -1.5% | ||||
| Manufacturing | 47.8 | 48.0 | 49.6 | 47.0 | 47.8 | 48.5 | 13.6 | 18.8 |
| 0.4% | 0.5% | 3.4% | -2.2% | 1.8% | 1.4% | |||
| 33.1% | 41.5% | 27.0% | -23.5% | 37.9% | ||||
| Total (2) | 297.2 | 296.8 | 296.4 | 295.7 | 296.4 | 296.8 | 105.2 | 115.8 |
| 0.7% | -0.1% | -0.1% | -0.3% | 0.2% | 0.2% | |||
| 9.5% | 9.8% | 6.2% | -10.7% | 10.1% | ||||
(1) Monthly figures are seasonally adjusted at annual rates (SAAR figures). | ||||||||
The Forecast
The chief risks to the construction spending forecast include the continuing problems in Europe (with current focus on Spain and Greece, and some attention to Italy), the expiration of the Bush tax cuts at the end of the year, the need to raise the federal debt ceiling, and the threat of significantly higher oil prices for a sustained period. Despite these risks, RCD’s forecast is for spending totals to strengthen throughout 2012 and 2013 as U.S. economic growth improves, 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.
The forecast is for nonresidential construction spending to increase 5.6% in 2012 and to improve further in 2013, advancing 7.3%.
U.S. Nonresidential Construction | ||||||
| Actual | Forecast | |||||
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | |
| For Lease | 190.6 | 131.5 | 88.9 | 87.1 | 94.5 | 102.9 |
| Year-over-year % Change | 3.8% | -31.0% | -32.4% | -2.1% | 8.5% | 8.9% |
| Lodging | 35.8 | 25.5 | 11.6 | 8.9 | 11.0 | 12.3 |
| 24.7% | -28.8% | -54.4% | -23.7% | 23.8% | 11.4% | |
| Office | 68.6 | 51.9 | 37.9 | 34.6 | 35.7 | 38.7 |
| 5.1% | -24.3% | -27.1% | -8.5% | 3.1% | 8.5% | |
| Commercial (mainly retail) | 86.2 | 54.1 | 39.5 | 43.6 | 47.8 | 51.9 |
| -3.9% | -37.3% | -27.0% | 10.4% | 9.7% | 8.5% | |
| Institutional | 193.9 | 187.4 | 161.1 | 154.7 | 155.3 | 162.6 |
| 8.1% | -3.4% | -14.0% | -4.0% | 0.4% | 4.6% | |
| Health Care | 46.9 | 44.8 | 39.3 | 39.7 | 41.8 | 45.9 |
| 7.2% | -4.4% | -12.3% | 0.9% | 5.2% | 9.8% | |
| Education | 104.9 | 103.2 | 88.4 | 84.3 | 83.4 | 85.7 |
| 8.4% | -1.6% | -14.3% | -4.6% | -1.1% | 2.8% | |
| Religious | 7.2 | 6.2 | 5.3 | 4.2 | 3.8 | 3.8 |
| -4.2% | -14.3% | -14.6% | -20.1% | -10.4% | 1.6% | |
| Public Safety | 13.1 | 13.8 | 11.2 | 10.2 | 10.4 | 10.5 |
| 28.3% | 5.4% | -19.1% | -8.2% | 1.7% | 0.6% | |
| Amusement/Recreation | 21.8 | 19.4 | 16.9 | 16.2 | 15.9 | 16.6 |
| 2.9% | -11.1% | -12.7% | -4.5% | -1.4% | 4.1% | |
| Manufacturing | 53.2 | 56.8 | 40.4 | 41.4 | 49.2 | 55.4 |
| 31.0% | 6.8% | -29.0% | 2.6% | 18.8% | 12.8% | |
| Total (1) | 437.7 | 375.7 | 290.4 | 283.1 | 299.0 | 320.9 |
| 8.4% | -14.2% | -22.7% | -2.5% | 5.6% | 7.3% | |
(1) Total may not equal the sum of its components due to rounding. | ||||||
Read more forecasts from Reed Construction Data:
Construction Spending Rose for the Second Consecutive Month
Heavy Engineering (Non-Building) Construction Edges Up in May
New Residential Construction Spending Continues Its Improvement
