Nonresidential Building Construction Spending Partially Recovers in February

04/26/2013 by Bernard M. Markstein

Nonresidential building construction spending rose 0.6% at a seasonally adjusted (SA) rate in February, after falling 1.1% in January. December and January nonresidential construction spending numbers were revised down $2.7 billion and $1.2 billion, respectively, which was a drop of 0.9% and 0.4% from the previously reported numbers. On a year-to-date (January and February), not seasonally adjusted (NSA) basis, nonresidential building construction spending increased 0.6%.

“For lease” private projects spending increased 0.7% (SA) in February following no change in January. Year-to-date, February for lease spending was up 5.7% (NSA) over the same period in 2012. Lodging construction spending jumped 4.2% in February, but that followed a 7.3% plunge in January. Office construction spending edged down 0.2% after slipping 0.1% in January. Retail construction spending has gained strength so far this year, advancing 0.6% in February following a 1.8% surge in January. On a year-to-date NSA basis, lodging spending increased 13.9%, office construction spending increased 8.1%, and retail construction spending increased 1.8% compared to the same period in 2012.

Construction spending for institutional projects was up 0.5% in February following a decrease of 1.5% in January. Year-to-date, institutional spending dropped 6.4% (NSA) from 2012. Health care and education construction spending, the two largest categories in this group, were 1.9% and 0.3% higher, respectively, in February. On a year-to-date basis, all of the categories for the group were lower than in 2012.

Manufacturing construction spending rose 0.6% in February after falling 2.2% in January. Nonetheless, year-to-date manufacturing construction spending was up 13.4% from 2012.

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

  Monthly Figures (1)
(latest actual values)
3-Month Moving Average Year-to-Date (NSA)
  Dec-12 Jan-13 Feb-13 Dec-12 Jan-13 Feb-13 Jan-12 to
Feb-12
Jan-13 to
Feb-13
For Lease 96.0 96.0 96.6 97.1 96.2 96.2 13.6 14.4
  Month-over-Month
  % Change
-0.7% 0.0% 0.7% 0.4% -0.9% 0.0%    
  Year-over-year
  % Change (NSA)
5.1% 5.1% 6.2% 8.6% 6.1% 5.5% 11.8% 5.7%
     Lodging 11.6 10.8 11.2 11.6 11.2 11.2 1.6 1.8
  2.7% -7.3% 4.2% 1.5% -3.1% -0.3%    
  15.9% 11.7% 16.0% 22.5% 16.0% 14.6% 13.5% 13.9%
     Office 38.0 38.0 37.9 38.1 38.0 37.9 5.3 5.7
  0.0% -0.1% -0.2% 1.5% -0.3% -0.1%    
  7.6% 8.8% 7.4% 10.0% 8.8% 7.9% 3.3% 8.1%
     Commercial
     (mainly retail)
46.4 47.3 47.5 47.4 47.0 47.1 6.8 6.9
  -2.1% 1.8% 0.6% -0.7% -0.8% 0.1%    
  0.6% 0.6% 3.0% 4.6% 1.8% 1.4% 19.1% 1.8%
Institutional 150.5 148.3 149.0 151.9 149.9 149.3 22.8 21.4
  -0.2% -1.5% 0.5% -0.7% -1.3% -0.4%    
  -3.7% -4.8% -5.2% -2.8% -4.9% -6.0% 6.2% -6.4%
     Health Care 39.9 40.2 40.9 40.2 40.0 40.3 6.3 6.2
  0.5% 0.6% 1.9% 0.7% -0.5% 1.0%    
  -2.5% -1.2% -1.0% 0.5% -1.7% -1.6% 6.2% -1.1%
     Education 82.2 80.4 80.7 82.6 81.6 81.1 11.9 11.1
  0.0% -2.2% 0.3% -0.9% -1.2% -0.6%    
  -4.4% -6.6% -7.4% -3.4% -4.7% -6.1% 7.1% -7.0%
     Religious 3.7 3.7 3.7 3.8 3.7 3.7 0.7 0.6
  1.9% -0.7% -0.9% 0.3% -2.0% 0.1%    
  -9.0% -10.9% -13.0% -5.7% -9.1% -11.0% -7.9% -12.0%
     Public Safety 9.6 9.5 9.5 9.6 9.5 9.5 1.6 1.4
  1.5% -0.8% 0.2% -1.1% -0.9% 0.3%    
  -12.0% -10.7% -13.8% -8.9% -11.3% -12.2% 11.8% -12.2%
     Amusement/
     Recreation
15.1 14.5 14.2 15.8 15.1 14.6 2.3 2.1
  -4.8% -3.4% -2.2% -3.4% -4.3% -3.5%    
  -12.0% -11.1% -11.8% -3.3% -8.6% -11.7% 2.6% -11.4%
Manufacturing 53.0 51.8 52.1 50.9 51.7 52.3 6.9 7.9
  5.3% -2.2% 0.6% 2.6% 1.6% 1.2%    
  7.0% 16.1% 10.9% 7.8% 10.4% 10.9% 46.1% 13.4%
Total (2) 299.5 296.1 297.8 299.9 297.9 297.8 43.4 43.7
  0.5% -1.1% 0.6% 0.2% -0.7% 0.0%    
  0.1% 1.0% 0.2% 2.5% 1.1% 0.4% 12.9% 0.6%

(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 struggling this year. The forecast is for an increase of 2.7% in 2013, which roughly matches likely increases in construction costs in 2012. The 2014 forecast is for a much improved increase of 8.5%.

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 94.5 100.3 108.7
   Year-over-year % Change -31.0% -32.4% -2.1% 8.5% 6.1% 8.3%
     Lodging 25.5 11.6 8.9 11.1 11.7 13.0
-28.8% -54.4% -23.7% 24.6% 5.9% 10.6%
     Office 51.9 37.9 34.6 36.5 39.6 42.8
  -24.3% -27.1% -8.5% 5.3% 8.7% 8.1%
     Commercial (mainly retail) 54.1 39.5 43.6 47.0 48.9 52.9
-37.3% -27.0% 10.4% 7.8% 4.2% 8.0%
Institutional 187.4 161.1 154.7 155.5 152.2 162.3
  -3.4% -14.0% -4.0% 0.5% -2.1% 6.6%
     Health Care 44.8 39.3 39.7 40.6 41.6 45.1
-4.4% -12.3% 0.9% 2.3% 2.3% 8.5%
     Education 103.2 88.4 84.3 84.8 82.7 87.6
  -1.6% -14.3% -4.6% 0.6% -2.5% 6.0%
     Religious 6.2 5.3 4.2 3.9 3.8 4.0
-14.3% -14.6% -20.1% -7.6% -3.2% 4.9%
     Public Safety 13.8 11.2 10.2 10.1 9.6 9.9
5.4% -19.1% -8.2% -0.9% -5.3% 3.6%
     Amusement/Recreation 19.4 16.9 16.2 16.0 14.6 15.6
-11.1% -12.7% -4.5% -1.2% -8.5% 6.9%
Manufacturing 56.8 40.4 41.4 49.1 54.7 62.4
  6.8% -29.0% 2.6% 18.6% 11.5% 14.1%
Total (1) 375.7 290.4 283.1 299.1 307.2 333.3
-14.2% -22.7% -2.5% 5.6% 2.7% 8.5%

(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 Improves in February
Heavy Engineering Construction Begins to Improve in February
Single-family Construction Sends New Residential Spending Higher in February