Nonresidential Building Construction Spending Drops in January

03/27/2013 by Bernard M. Markstein

Nonresidential building construction spending fell 1.6% at a seasonally adjusted (SA) rate in January, following a 1.4% increase in December. December nonresidential construction spending was revised up $1.2 billion, 0.4% of the previously reported number. On a year-over-year, not seasonally adjusted (NSA) basis, January construction spending increased 1.5%.

“For lease” private projects spending declined 0.7% (SA) in January after rising 0.8% in December. On a year-over-year NSA basis, January for lease spending was up 6.5%. Lodging construction spending plummeted 5.1% in January after edging up 0.1% in December. Office construction spending decreased 1.2% after jumping 2.2% in December. Retail construction spending rose 0.7% after slipping 0.1% in December. For January, on a year-over-year, not seasonally adjusted (NSA) basis, lodging spending increased 11.6%, office construction spending increased 10.0%, and retail construction spending increased 2.5%.

Construction spending for institutional projects was down 1.7% in January after advancing 0.6% in December. On a year-over-year NSA basis, January institutional spending fell 4.4%. Health care and religious construction spending were the only two categories in this group that were up in January — 0.7% and 1.2%, respectively. All of the categories for the group were down in January from January 2012.

Manufacturing construction spending tumbled 3.0% in January, ending five consecutive months of increases. However, December spending was revised up $2.3 billion, 4.5% higher than the previously reported number. This raised the rate of increase for December from 2.5% to 5.2%. Even with the drop from December, January’s manufacturing construction spending was 15.6% higher than in January 2012 and the second highest spending level since October 2009.

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

  Monthly Figures (1)
(latest actual values)
3-Month Moving Average
  Nov-12 Dec-12 Jan-13 Nov-12 Dec-12 Jan-13
For Lease 96.7 97.5 96.8 96.7 97.6 97.0
  Month-over-Month
  % Change
-1.8% 0.8% -0.7% 0.1% 1.0% -0.6%
  Year-over-year
  % Change (NSA)
8.0% 7.2% 6.5%      
     Lodging 11.3 11.3 10.7 11.4 11.5 11.1
  -4.4% 0.1% -5.1% -0.8% 0.7% -3.2%
  20.3% 13.1% 11.6%      
     Office 38.0 38.8 38.3 37.5 38.4 38.4
  -0.7% 2.2% -1.2% 0.6% 2.3% 0.1%
  9.9% 10.5% 10.0%      
     Commercial
     (mainly retail)
47.4 47.4 47.7 47.7 47.7 47.5
  -2.1% -0.1% 0.7% 0.0% 0.0% -0.5%
  3.9% 3.3% 2.5%      
Institutional 150.9 151.8 149.1 153.1 152.4 150.6
  -2.2% 0.6% -1.7% -1.5% -0.5% -1.1%
  -2.6% -2.7% -4.4%      
     Health Care 39.7 39.6 39.9 39.9 40.1 39.8
  -2.5% -0.3% 0.7% -2.3% 0.4% -0.7%
  -1.4% -3.2% -1.9%      
     Education 82.3 83.6 81.1 83.4 83.1 82.3
  -1.3% 1.6% -3.0% -1.2% -0.4% -0.9%
  -3.3% -2.5% -5.8%      
     Religious 3.7 3.7 3.8 3.8 3.8 3.7
  -6.7% 2.0% 1.2% -1.3% 0.3% -1.3%
  -7.4% -9.3% -9.3%      
     Public Safety 9.4 9.6 9.4 9.7 9.6 9.5
  -3.4% 1.9% -2.3% -2.3% -1.0% -1.3%
  -11.2% -11.7% -12.8%      
     Amusement/
     Recreation
15.8 15.2 15.0 16.4 15.9 15.3
  -4.6% -4.1% -1.1% -0.5% -3.1% -3.3%
  -3.2% -11.5% -8.5%      
Manufacturing 50.3 52.9 51.4 49.6 50.9 51.5
  1.9% 5.2% -3.0% 1.6% 2.6% 1.3%
  9.4% 6.1% 15.6%      
Total (2) 297.9 302.2 297.3 299.3 300.8 299.2
  -1.4% 1.4% -1.6% -0.5% 0.5% -0.5%
  2.2% 1.0% 1.5%      

(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
Nonresidential construction spending is forecasted to increase 2.8% this year, which is barely treading water given likely increases in construction costs, and to increase 8.4% in 2014.

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

  Actual Forecast
  2009 2010 2011 2012 2013 2014
For Lease 131.5 88.9 87.1 94.7 100.8 109.1
   Year-over-year % Change -31.0% -32.4% -2.1% 8.7% 6.5% 8.2%
     Lodging 25.5 11.6 8.9 11.0 11.7 12.9
-28.8% -54.4% -23.7% 24.3% 5.5% 10.3%
     Office 51.9 37.9 34.6 36.6 39.9 43.1
  -24.3% -27.1% -8.5% 5.5% 9.2% 8.1%
     Commercial (mainly retail) 54.1 39.5 43.6 47.1 49.3 53.1
-37.3% -27.0% 10.4% 8.0% 4.6% 7.8%
Institutional 187.4 161.1 154.7 155.6 152.7 162.8
  -3.4% -14.0% -4.0% 0.6% -1.8% 6.6%
     Health Care 44.8 39.3 39.7 40.6 41.1 44.5
-4.4% -12.3% 0.9% 2.2% 1.1% 8.5%
     Education 103.2 88.4 84.3 84.9 82.9 87.9
  -1.6% -14.3% -4.6% 0.7% -2.4% 6.0%
     Religious 6.2 5.3 4.2 3.9 3.9 4.1
-14.3% -14.6% -20.1% -7.6% -0.7% 4.9%
     Public Safety 13.8 11.2 10.2 10.1 9.6 9.9
5.4% -19.1% -8.2% -0.9% -5.7% 3.6%
     Amusement/Recreation 19.4 16.9 16.2 16.0 15.3 16.4
-11.1% -12.7% -4.5% -1.1% -4.0% 6.9%
Manufacturing 56.8 40.4 41.4 49.0 54.1 61.7
  6.8% -29.0% 2.6% 18.5% 10.4% 14.0%
Total (1) 375.7 290.4 283.1 299.3 307.7 333.6
-14.2% -22.7% -2.5% 5.7% 2.8% 8.4%

(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.

Read more forecasts from Reed Construction Data:

Construction Spending Stumbles at the Beginning of 2013
Heavy Engineering Construction Craters in January
New Residential Construction Spending Chugs Higher in January