Associated Builders and Contractors Inc.

Nonresidential Construction Spending Falls After Two Months of Gains

In the U.S. Census Bureau report analyzing construction spending for June, nonresidential construction spending fell for the month after posting significant gains the two prior months but remains 4.6 percent higher from a year ago. Spending for June totaled $588.8 billion on a seasonally adjusted, annualized basis, a 2.8 percent drop from the upwardly revised $605.6 billion in nonresidential construction spending from the previous report.

“The monthly decline in spending should not be cause for significant alarm,” said Associated Builders and Contractors Chief Economist Anirban Basu. “The impact of a brutal winter continues to manifest itself in the data. A considerable volume of construction was postponed during the year’s initial months with some of that construction taking place in April and May, artificially boosting activity during those months. Accordingly, June doesn’t look particularly good from a month-over-month perspective, but from a year-over-year perspective, the growth in spending looks perfectly adequate. Stakeholders should not have anticipated an upbeat June number in any case after national nonresidential construction employment expanded by just 100 people that month.”

“With job growth accelerating, consumer outlays expanding, industrial production rising and energy production surging, the outlook for nonresidential construction remains good,” said Basu. “The next few months should be associated with improving performance, if not on a monthly basis, then on a year-over-year one.”

Five of 16 nonresidential construction subsectors posted increases in spending in June on a monthly basis.

  • Office-related construction spending grew by 0.4 percent in June and is up 20.7 percent from the same time one year ago.
  • Religious spending grew 0.7 percent for the month and is up 4.3 percent from the same time last year.
  • Sewage and waste disposal-related construction spending gained 0.3 percent for the month and has grown 7.8 percent on a 12-month basis.
  • Conservation and development-related construction spending expanded by 13.5 percent for the month and is up 47.6 percent on a yearly basis.
  • Health care-related construction spending grew 2.5 percent for the month, but is down 5.6 percent on an annual basis.

Spending in 11 nonresidential construction subsectors declined in June.

  • Manufacturing-related spending fell 0.4 percent on a monthly basis, but is up 8.4 percent from the same time last year.
  • Education-related construction spending fell 4 percent for the month and is down 6 percent on a year-over-year basis.
  • Commercial construction spending fell 1.4 percent in June but is up 9.7 percent on a year-over-year basis.
  • Lodging construction spending is down 3 percent on a monthly basis but is up 19 percent on a year-over-year basis.
  • Spending in the water supply category fell 4.5 percent on both monthly and yearly bases.
  • Construction spending in the transportation category fell 0.6 percent on a monthly basis but has expanded by 6 percent on an annual basis.
  • Amusement and recreation-related construction spending fell 1.1 percent on a monthly basis but is up 9.2 percent from the same time last year.
  • Highway and street-related construction spending fell 10.4 percent in June and is down 8.5 percent compared to the same time last year.
  • Communication construction spending fell 4.9 percent for the month and is down 12.9 percent from the same time last year.
  • Public safety-related construction spending fell 2.4 percent on a monthly basis and has declined 5.1 percent on a year-over-year basis.
  • Power construction spending fell 3.3 percent for the month, but is 19 percent higher than at the same time one year ago.

View the May spending report.

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