Nonresidential Construction Spending Could Regain Momentum in Months Ahead

Nonresidential construction spending increased 1.6 percent on a monthly basis in October after declining 1.3 percent in September, according to the December 2 release by the U.S. Census Bureau. (This release contained two months of data because of the federal government shutdown.) On a year-over-year basis, nonresidential construction spending is down 0.7 percent through October. Spending totaled $575.563 billion for the month on a seasonally adjusted, annualized basis.

"As expected, construction spending was hindered by a combination of elevated uncertainty and delayed procurement resulting from the government shutdown," said Associated Builders and Contractors Chief Economist Anirban Basu. "The October data suggest nonresidential construction spending could regain a certain degree of momentum during the months ahead, though the long-anticipated acceleration in spending is unlikely to occur until after the first quarter of 2014."

ABC Forecasts Nonresidential Construction Spending Will Increase in 2014

Thirteen of 16 nonresidential construction subsectors posted increases in spending in October.

  • Public safety-related construction spending grew 5.6 percent but has declined 1.2 percent on a year-over-year basis.
  • Amusement and recreation-related spending was up 1.8 percent on a monthly basis but is 1 percent lower than the same time last year.
  • Conservation and development spending was up 6.7 percent for the month but is down 7.2 percent for the year.
  • Lodging spending grew by 1.2 percent on a monthly basis and is up 17.5 percent on a year-over-year basis.
  • Religious spending grew 2.2 percent for the month but is down 12.6 percent compared to the same time last year.
  • Education-related construction spending expanded 8.1 percent for the month but is down 12.6 percent on a year-over-year basis.
  • Commercial construction spending increased 2.8 percent in October and is up 4.4 percent on a year-over-year basis.
  • Water supply spending edged up 1.1 percent for the month and is 14.3 percent higher than the same time last year.
  • Health care-related construction spending was up 1.8 percent for the month but is down 0.6 percent for the year.

Spending in the following three nonresidential construction subsectors was down in October:

  • Sewage and waste disposal-related construction spending declined 2.6 percent for the month but has grown 4.5 percent on an annual basis.
  • Construction spending in the power category declined 3.7 percent on a monthly basis and is down 15.1 percent for the year.
  • Communication-related construction spending fell 8.2 percent for the month and is down 16.1 percent on a yearly basis.

View the August spending report.

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