Nonresidential Construction Spending Points Lower in September

While September spending nonresidential construction spending was up, a report from the economy gurus at the Associated Builders and Contractors Inc. suggests that nonresidential construction spending is going to remain flat in the months ahead.

While total construction spending edged up in September, private nonresidential construction slipped 1.6 percent, according to the November 1 report by the U.S. Census Bureau. On a year-over-year basis, private nonresidential construction spending is down 24.6 percent. Meanwhile, total nonresidential construction spending – which includes both privately and publicly financed projects – was flat for the month and is down 12.4 percent from September 2009, and now stands at $559.6 billion on a seasonally adjusted annual rate.

“Though the media will likely focus upon the fact that total construction spending was up in September for the first time in three months, there is relatively little to celebrate in the most recent construction spending report,” said Associated Builders and Contractors Chief Economist Anirban Basu. “For example, total nonresidential construction spending last September totaled $639 billion on an annualized basis. In contrast, the total this September is $560 billion, a decline exceeding 12 percent. In addition, nonresidential construction volumes were virtually unchanged from August, and remained lower than they were during the early summer.”

Construction subsectors posting the largest monthly decreases were lodging, down 7.8 percent; manufacturing, 3.5 percent lower; and conservation and development-related construction, down 3.1 percent. Those subsectors suffering the biggest losses from the same time last year include lodging, down 53 percent; manufacturing, down 35.5 percent; and office construction, 24.5 percent lower.

In contrast, nine of sixteen nonresidential construction subsectors posted spending increases from the previous month led by transportation, up 4.1 percent; health care, 1.8 percent higher; office, up 1.6 percent; and amusement and recreation-related construction, up 1.6 percent. Five subsectors are up, compared to the same time last year, including conservation and development, up 25.5 percent; sewage and waste disposal, 13.9 percent higher; and water supply construction, up 7.7 percent.