The Marcum Commercial Construction Index highlights the continued spending weakness in nonresidential construction during the first nine months of the year and points to a significant anticipated change beginning in 2017. The change is being attributed to the major infrastructure-led stimulus package expected from the new Presidential administration. The national Construction Industry Practice group of Marcum LLP, a top national accounting and advisory firm, produces the quarterly index.
Overall nonresidential construction spending in September totaled $690.5 billion, down a slight 0.7 percent from a year earlier. Of the category’s 16 subsectors, bright spots included Office-related spending, which registered a whopping 23% gain to $70.7 billion; Lodging, up 20% year-over-year to $28.8 billion; Commercial construction, with a 6% gain to $71.7 billion; Amusement & Recreation, up 3.5% to $21.4 billion; and Educational construction, at $87.1 billion, a 3.3% percent increase.
The remaining 11 nonresidential subsectors all recorded fall-offs for the month, with the greatest declines in Sewage & Waste Disposal (-18.8%), Water Supply (-13.7%), Communication (-12.6%) and Transportation (-11.3%).
“Most construction firms report intense difficulty securing electricians, heating/cooling professionals, welders and carpenters, among others,” says Anirban Basu, Marcum’s Chief Construction Economist, in a press release. The construction worker unemployment rate in October was less than half of what it was five years ago, down to 5.7 % from 13.7 % in the same month of 2011. This compares to a national unemployment rate of 4.9% at the end of the 2016 third quarter.
Looking ahead, the Marcum report predicts that a stimulus package will put pressure on wages and inflation and lead to higher interest rates, which in turn will eventually hurt construction spending. “After a period of relatively intense construction spending due in part to a stimulus package, the nonresidential sector could face a sharp slowdown in construction spending thereafter,” it states.
For the complete Marcum Commercial Construction Index, visit www.marcumllp.com/industries/construction.
Related Stories
Market Data | Feb 17, 2016
AIA reports slight contraction in Architecture Billings Index
Multifamily residential sector improving after sluggish 2015.
Market Data | Feb 11, 2016
AIA: Continued growth expected in nonresidential construction
The American Institute of Architects’ semi-annual Consensus Construction Forecast indicates a growth of 8% in construction spending in 2016, and 6.7% the following year.
Market Data | Feb 10, 2016
Nonresidential building starts and spending should see solid gains in 2016: Gilbane report
But finding skilled workers continues to be a problem and could inflate a project's costs.
Market Data | Feb 9, 2016
Cushman & Wakefield is bullish on U.S. economy and its property markets
Sees positive signs for construction and investment growth in warehouses, offices, and retail
Market Data | Feb 5, 2016
CMD/Oxford forecast: Nonresidential building growth will recover modestly in 2016
Increased government spending on infrastructure projects should help.
Market Data | Feb 4, 2016
Mortenson: Nonresidential construction costs expected to increase in six major metros
The Construction Cost Index, from Mortenson Construction, indicated rises between 3 and 4% on average.
Contractors | Feb 1, 2016
ABC: Tepid GDP growth a sign construction spending may sputter
Though the economy did not have a strong ending to 2015, the data does not suggest that nonresidential construction spending is set to decline.
Data Centers | Jan 28, 2016
Top 10 markets for data center construction
JLL’s latest outlook foresees a maturation in certain metros.
Market Data | Jan 20, 2016
Nonresidential building starts sag in 2015
CDM Research finds only a few positive signs among the leading sectors.
Market Data | Jan 20, 2016
Architecture Billings Index ends year on positive note
While volatility persists, architecture firms reported healthy performance for 2015.