Associated Builders and Contractors Inc.

Nonresidential Construction Spending Falls for Second Straight Month

Nonresidential construction spending declined for the second consecutive month, falling 0.3 percent in January, but is up 6.5 percent over the past year, according to a March 3 release by the U.S. Census Bureau. Spending for the month totaled $578.7 billion on a seasonally adjusted, annualized basis.

“Wicked weather has produced a temporary halt to the nation’s nonresidential construction recovery,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Based on backlog and other leading indicators, 2014 should have gotten off to a decent start; however, the cold and dislocating weather has now persisted into March, strongly suggesting that the first quarter of 2014 will not end up being a period of progress for the nation’s nonresidential construction segments.

“Though this winter has been more challenging than most, January declines in nonresidential construction spending are not unusual, even on a seasonally adjusted basis,” Basu said. “During six of the past seven years, January nonresidential construction spending has fallen, often sharply. The implication is that 2014’s weak start should not be indicative of what performance is likely to be come spring.

“Although spending declined in 11 of 16 nonresidential construction subsectors, half of the six largest subsectors posted increases for the month,” Basu said. “This is a reflection of a number of factors, including technological innovation in the nation’s energy sector, led by North Dakota and Texas, and the start of two large manufacturing projects: a $450 million oil refinery in North Dakota and a $1.2 billion propane dehydration facility in Alvin, Texas.”

In aggregate, five of the 16 nonresidential construction subsectors posted increases in spending in January:

  • Communication construction spending was up 18.2 percent for the month and 40.4 percent for the year
  • Highway and street-related construction spending expanded 3.7 percent in January and increased 15.2 percent compared to the same time last year
  • Manufacturing-related spending expanded by 3.5 percent on a monthly basis and increased 7.1 percent for the year
  • Spending in the water supply category increased 1.7 percent on the month but decreased 7.9 percent for the year
  • Construction spending in the transportation category grew 1.2 percent on a monthly basis and expanded by 7.8 percent on an annual basis

Spending in 11 nonresidential construction subsectors decreased in January, including:

  • Amusement and recreation-related construction spending was down 9.7 percent on a monthly basis and has shed 4 percent from the same time last year
  • Sewage and waste disposal-related construction spending declined 4.3 percent for the month but increased 2.2 percent on a 12-month basis
  • Commercial construction spending fell 2.5 percent in January, but increased 12.4 percent on a year-over-year basis
  • Religious spending fell 2.5 percent for the month and 12.1 percent from the same time last year
  • Education-related construction spending fell 1.6 percent for the month and 2 percent on a year-over-year basis
  • Health care-related construction spending fell 1.2 percent for the month and 4.5 percent for the year
  • Lodging construction spending fell 0.5 percent on a monthly basis, but increased an astonishing 44.8 percent on a year-over-year basis
  • Public safety-related construction spending fell 0.3 percent on a monthly basis and declined 0.2 percent on a year-over-year basis
  • Office-related construction spending dipped 0.2 percent in January but is up 11 percent from the same time one year ago

View the December 2013 spending report.

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