Nonresidential Building Construction Spending Increases at the End of 2012

02/26/2013 by Bernard M. Markstein

Nonresidential building construction spending advanced 1.0% at a seasonally adjusted (SA) rate in December, a partial recovery from the 1.4% drop in November. For the year, spending increased 5.6% over 2011.

“For lease” private projects spending rose a modest 0.4% (SA) in December after sinking 1.6% in November. For 2012, for lease spending increased 8.7% over 2011. Lodging construction spending grew 1.8% in December after plummeting 3.5% in November. Office construction spending rebounded 2.0% after dropping 1.7% in November. Retail construction spending held back the increase in for lease spending, falling 1.3%, following a 1.0% decline in November. For the year, lodging spending increased 24.7%, office construction spending increased 5.2%, and retail construction spending increased 8.2% over 2011.

Construction spending for institutional projects rose 0.9% in December after decreasing 1.7% in November. For 2012, institutional spending increased a modest 0.7% over 2011. All the categories in this group were up in December except for public safety spending, which slipped 0.2%. For the year, only two categories were up — health care (+2.4%) and education (+0.8%).

Manufacturing construction spending increased for the fifth consecutive month, jumping 2.5% in December after inching up 0.2% in November. Spending for October and November were revised up $0.9 billion and $1.5 billion, respectively. That turned declines for both months into gains. For the year, manufacturing construction spending increased 17.2% over 2011.

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

  Monthly Figures (1)
(latest actual values)
3-Month Moving Average Year-to-Date (NSA)
  Oct-12 Nov-12 Dec-12 Oct-12 Nov-12 Dec-12 Jan-11 to
Dec-11
Jan-12 to
Dec-12
For Lease 98.5 96.9 97.3 96.5 96.7 97.6 87.1 94.7
  Month-over-Month
  % Change
4.0% -1.6% 0.4% 1.7% 0.2% 0.9%    
  Year-over-year
  % Change (NSA)
12.5% 8.5% 6.9%       -2.1% 8.7%
     Lodging 11.8 11.4 11.6 11.5 11.4 11.6 8.9 11.1
  6.7% -3.5% 1.8% 0.7% -0.5% 1.5%    
  32.2% 21.5% 16.1%       -23.7% 24.7%
     Office 38.3 37.6 38.3 37.3 37.4 38.1 34.6 36.5
  5.6% -1.7% 2.0% 2.2% 0.3% 1.9%    
  12.5% 8.3% 8.5%       -8.5% 5.2%
     Commercial
     (mainly retail)
48.4 47.9 47.3 47.8 47.9 47.9 43.6 47.2
  2.1% -1.0% -1.3% 1.5% 0.3% -0.1%    
  8.8% 5.9% 3.4%       10.4% 8.2%
Institutional 154.4 151.7 153.1 155.4 153.3 153.0 154.7 155.7
  0.3% -1.7% 0.9% -0.5% -1.3% -0.2%    
  -0.2% -2.1% -2.3%       -4.0% 0.7%
     Health Care 40.8 39.8 40.4 40.8 39.9 40.3 39.7 40.7
  4.1% -2.5% 1.5% -0.1% -2.3% 1.0%    
  5.5% -1.3% -1.4%       0.9% 2.4%
     Education 83.3 83.1 83.7 84.4 83.6 83.4 84.3 85.0
  -1.4% -0.3% 0.7% -1.0% -0.9% -0.3%    
  -2.8% -2.6% -2.8%       -4.6% 0.8%
     Religious 3.9 3.6 3.7 3.8 3.8 3.8 4.2 3.9
  6.1% -7.7% 1.5% 0.2% -1.6% -0.2%    
  -0.8% -8.3% -10.8%       -20.1% -7.8%
     Public Safety 9.8 9.4 9.3 9.9 9.7 9.5 10.2 10.1
  -1.4% -4.1% -0.2% -0.8% -2.5% -1.9%    
  -3.2% -11.7% -13.8%       -8.2% -1.1%
     Amusement/
     Recreation
16.6 15.8 16.0 16.4 16.4 16.1 16.2 16.1
  -0.8% -4.5% 0.9% 1.2% -0.4% -1.5%    
  4.7% -3.4% -6.7%       -4.5% -0.8%
Manufacturing 49.4 49.5 50.7 48.8 49.3 49.8 41.4 48.5
  0.6% 0.2% 2.5% 1.3% 1.0% 1.1%    
  7.1% 4.7% -1.6%       2.6% 17.2%
Total (2) 302.3 298.1 301.0 300.7 299.4 300.4 283.2 298.9
  1.5% -1.4% 1.0% 0.5% -0.5% 0.4%    
  5.1% 1.7% -0.2%       -2.5% 5.6%

(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 4.1% this year and to more than double that growth rate in 2014, increasing 8.4%.

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 94.7 101.1 109.3
   Year-over-year % Change -31.0% -32.4% -2.1% 8.7% 6.7% 8.2%
     Lodging 25.5 11.6 8.9 11.1 12.4 13.7
-28.8% -54.4% -23.7% 24.7% 11.9% 10.3%
     Office 51.9 37.9 34.6 36.5 39.6 42.8
  -24.3% -27.1% -8.5% 5.2% 8.7% 8.1%
     Commercial (mainly retail) 54.1 39.5 43.6 47.2 49.0 52.9
-37.3% -27.0% 10.4% 8.2% 4.0% 7.8%
Institutional 187.4 161.1 154.7 155.7 157.0 167.4
  -3.4% -14.0% -4.0% 0.7% 0.8% 6.7%
     Health Care 44.8 39.3 39.7 40.7 41.9 45.5
-4.4% -12.3% 0.9% 2.4% 3.0% 8.6%
     Education 103.2 88.4 84.3 85.0 85.4 90.5
  -1.6% -14.3% -4.6% 0.8% 0.6% 6.0%
     Religious 6.2 5.3 4.2 3.9 3.8 4.0
-14.3% -14.6% -20.1% -7.8% -3.0% 4.9%
     Public Safety 13.8 11.2 10.2 10.1 9.5 9.8
5.4% -19.1% -8.2% -1.1% -6.6% 3.6%
     Amusement/Recreation 19.4 16.9 16.2 16.1 16.4 17.6
-11.1% -12.7% -4.5% -0.8% 2.3% 7.3%
Manufacturing 56.8 40.4 41.4 48.5 53.0 60.5
  6.8% -29.0% 2.6% 17.2% 9.3% 14.0%
Total (1) 375.7 290.4 283.1 298.9 311.1 337.2
-14.2% -22.7% -2.5% 5.6% 4.1% 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 Ends 2012 on a High Note
Heavy Engineering Construction Ends the Year on a Sour Note
Continued Recovery in Housing Sends New Residential Construction Spending Higher in December