Nonresidential construction activity continues at a high level but has not expanded since last fall, after adjusting for project cost inflation, except for the construction of manufacturing facilities. Manufacturing construction spending was 25% higher in May than last September. Most of the increase in manufacturing construction is for process industries facilities. This means more pipes but very little more building space. Spending over the same period is up only 7% for nonresidential buildings and 5% for heavy projects.
Manufacturing activity is near the peak as export growth begins to slow and US domestic demand for manufactured goods is no longer growing. Nonetheless, the nominal value of monthly construction spending will rise into the summer due to soaring cost increases for metals.
Spending in the heavy construction market is stalled at the September 2007 level, after adjusting for inflation. This is partly due to shortages in many highway trust funds as fuel volume declines. Tighter public budgets and the end to more than three years of rising corporate profits also contribute to the stall.
Commercial developers are slowing some ongoing projects and delaying some new project starts until they are more certain that they can lease them for an acceptable rate of return. No significant drop in construction activity is expected because the commercial market is not overbuilt as it was at the onset of recent recessions. A short, shallow recession will not prevent resumed growth later next year.
The institutional building market is stalled at the September 2007 level as the result of very cautious spending budgets adopted by most states for the current fiscal year after three years of booming public spending growth. The budgets are too grim for the recession scenario in their forecast so some relaxation of spending restraints in expected this spring.
U.S. Non-building (Heavy Engineering) Construction
(billions of U.S. current dollars)
| Monthly Figures* (latest actual values) |
|||||||
| Actual | Forecast | ||||||
| Apr-08 | May-08 | 2005 | 2006 | 2007 | 2008 | 2009 | |
| Transportation (% change is period versus same period, previous year) |
35.090 | 35.095 | 24.959 | 27.912 | 32.274 | 35.417 | 37.975 |
| 16.7% | 12.6% | -0.2% | 11.8% | 15.6% | 9.7% | 7.2% | |
| Communication | 26.688 | 27.104 | 18.948 | 22.234 | 26.937 | 27.367 | 28.363 |
| 4.5% | -0.8% | 23.1% | 17.3% | 21.2% | 1.6% | 3.6% | |
| Power | 66.893 | 67.916 | 35.403 | 39.846 | 52.769 | 68.02383 | 73.550 |
| 36.3% | 28.8% | -7.7% | 12.5% | 32.4% | 28.9% | 8.1% | |
| Highway | 78.502 | 77.932 | 63.956 | 71.789 | 75.309 | 79.08675 | 83.475 |
| 6.8% | 6.0% | 8.7% | 12.2% | 4.9% | 5.0% | 5.5% | |
| Water and Sewer | 41.334 | 41.321 | 33.726 | 38.127 | 38.743 | 41.425 | 43.975 |
| 6.4% | 5.5% | 10.4% | 13.1% | 1.6% | 6.9% | 6.2% | |
| Conservation & Development | 4.644 | 4.673 | 4.457 | 5.101 | 5.219 | 5.031 | 5.488 |
| 4.7% | -1.9% | 10.4% | 14.4% | 2.3% | -3.6% | 9.1% | |
| Total | 253.151 | 254.041 | 181.448 | 205.008 | 231.251 | 256.350 | 272.825 |
| 14.3% | 11.1% | 5.4% | 13.0% | 12.8% | 10.9% | 6.4% | |
* Monthly figures are seasonally adjusted at annual rates (SAAR figures).
The total includes some miscellaneous buildings.
Actuals: U.S. Census Bureau, Department of Commerce (put-in-place investment figures).
Forecasts and table: Reed Research Group.
U.S. Nonresidential Construction
(billions of U.S. current dollars)
| Monthly Figures* (latest actual values) |
Annual Figures | ||||||
| Actual | Forecast | ||||||
| Apr-08 | May-08 | 2005 | 2006 | 2007 | 2008 | 2009 | |
| Lodging (% change is period versus same period, previous year) |
36,889 | 37,856 | 12,840 | 17,984 | 28,602 | 36,912 | 40200 |
| 40.04% | 61.64% | 3.85% | 40.06% | 59.04% | 29.05% | 8.91% | |
| Office | 73,252 | 73,574 | 45,857 | 54,170 | 64,702 | 73,682 | 77,500 |
| 20.74% | 16.19% | 8.44% | 18.13% | 19.44% | 13.88% | 5.18% | |
| Commercial (mainly retail) | 90,090 | 89,108 | 70,248 | 76,673 | 88,478 | 88,794 | 89,850 |
| 3.45% | 17.15% | 4.90% | 9.15% | 15.40% | 0.36% | 1.19% | |
| Health Care | 45,254 | 45,198 | 34,413 | 38,489 | 42,904 | 45,385 | 48,850 |
| 7.80% | 10.60% | 7.04% | 11.84% | 11.47% | 5.78% | 7.64% | |
| Education | 102,037 | 103,648 | 79,575 | 85,081 | 96,085 | 104,261 | 112,813 |
| 8.98% | 14.85% | 7.42% | 6.92% | 12.93% | 8.51% | 8.20% | |
| Religious | 6,980 | 6,745 | 7,743 | 7,746 | 7,454 | 6,915 | 7,235 |
| -6.09% | -5.94% | -5.07% | 0.05% | -3.77% | -7.23% | 4.63% | |
| Public Safety | 11,795 | 0 | 7,284 | 7,810 | 9,877 | 11,845 | 12,614 |
| 27.36% | 24.02% | 4.02% | 7.23% | 26.47% | 19.92% | 6.49% | |
| Amusement/Recreation | 23,720 | 23,009 | 15,268 | 18,990 | 21,610 | 23,140 | 24,138 |
| 16.97% | 15.26% | -8.50% | 24.38% | 13.80% | 7.08% | 4.31% | |
| Manufacturing | 53,684 | 54,188 | 30,012 | 35,113 | 42,538 | 53,819 | 55,575 |
| 29.73% | 16.19% | 26.53% | 17.00% | 21.14% | 26.52% | 3.26% | |
| Total | 443,909 | 445,253 | 303,239 | 342,045 | 402,242 | 444,844 | 468,774 |
| 14.40% | 17.39% | 7.00% | 12.80% | 17.60% | 10.59% | 5.38% | |
* Monthly figures are seasonally adjusted at annual rates (SAAR figures).
The total includes some miscellaneous state and local government buildings.
Actuals: U.S. Census Bureau (Department of Commerce) (put-in-place investment figures).
Forecasts and table: Reed Construction Data.
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