Real gross domestic product (GDP) expanded 2.9 percent on a seasonally adjusted annualized rate during the third quarter of 2016, according to an analysis of Bureau of Economic Analysis data released today by Associated Builders and Contractors (ABC). This follows a 1.4 percent increase during the second quarter and represents the tenth consecutive quarter of economic expansion.
Nonresidential fixed investment, a category closely aligned with construction and other forms of business investment, expanded at a 1.2 percent annualized rate during the third quarter after growing 1 percent during the second. Investment in structures led the way, increasing by 5.4 percent in the third quarter after falling 2.1 percent during the second. Investment in equipment fell 2.7 percent for the quarter, while investment in intellectual property products expanded 4 percent. Residential investment continued to fall, declining 6.2 percent in the third quarter after falling 7.7 percent during the second.
The following highlights emerged from today’s third quarter GDP release. All growth figures are presented as seasonally adjusted annualized rates:
- Personal consumption expenditures expanded 2.1 percent on an annualized basis during the third quarter of 2016 after growing 4.3 percent during the second quarter of 2016.
- Spending on goods rose 2.2 percent during the third quarter after expanding by 7.1 percent during the previous quarter.
- Real final sales of domestically produced output increased 2.3 percent in the third quarter after increasing 2.6 percent in the second.
- Federal government spending expanded 2.5 percent in the year’s third quarter after contracting during each of the prior two quarters.
- Nondefense government spending increased 3 percent during the quarter following an increase of 3.8 percent during the second.
- National defense spending grew by 2.1 percent during the third quarter after registering a 3.2 percent decline in the previous quarter.
- State and local government spending fell by 0.7 percent in the third quarter after falling 2.5 percent in the second quarter.
“The acceleration in real GDP growth was driven by a combination of factors, including an upturn in exports, a smaller decrease in state and local government spending and an upturn in federal government spending. One of the biggest impacts came from greater private inventory investment, likely in response to expectations for reasonably strong consumer spending. Growth in personal consumption expenditures was responsible for almost half of third quarter GDP growth. However, this build in inventories is likely to subtract from economic growth in future quarters, though not massively,” says ABC Chief Economist Anirban Basu.
“Third quarter growth was solid, but future quarters may not be as good,” Basu says. “The economy will have to deal with a number of headwinds going forward, including a stronger dollar, building inflationary pressures and higher interest rates. Consumer spending growth will continue to lead the recovery. While this will help support construction spending in certain categories, including distribution centers, nonresidential investment in structures is likely to expand only slowly in early 2017.”
Related Stories
Market Data | Sep 14, 2020
6 must reads for the AEC industry today: September 14, 2020
63% of New York's restaurants could be gone by 2021 and new weapons in the apartment amenities arms race.
Market Data | Sep 11, 2020
5 must reads for the AEC industry today: September 11, 2020
Des Moines University begins construction on new campus and the role of urgent care in easing the oncology journey.
Market Data | Sep 10, 2020
6 must reads for the AEC industry today: September 10, 2020
Taipei's new Performance Hall and Burger King's touchless restaurant designs.
Market Data | Sep 9, 2020
6 must reads for the AEC industry today: September 9, 2020
What will the 'new normal' look like and the AIA hands out its Twenty-five Year Award.
Market Data | Sep 8, 2020
‘New normal’: IAQ, touchless, and higher energy bills?
Not since 9/11 has a single event so severely rocked the foundation of the commercial building industry.
Market Data | Sep 8, 2020
7 must reads for the AEC industry today: September 8, 2020
Google proposes 40-acre redevelopment plan and office buildings should be an essential part of their communities.
Market Data | Sep 4, 2020
6 must reads for the AEC industry today: September 4, 2020
10 Design to redevelop Nanjing AIrport and TUrner Construction takes a stand against racism.
Market Data | Sep 4, 2020
Construction sector adds 16,000 workers in August but nonresidential jobs shrink
Association survey finds contractor pessimism is increasing.
Market Data | Sep 3, 2020
6 must reads for the AEC industry today: September 3, 2020
New affordable housing comes to the Bronx and California releases guide for state water policy.
Market Data | Sep 2, 2020
Coronavirus has caused significant construction project delays and cancellations
Yet demand for skilled labor is high, new survey finds.