The latest Construction Economic Update from the Associated Builders and Contractors (ABC) reported a 3.4% decline in nonresidential fixed investment during the first quarter of 2015. According to a recent gross domestic product report by the Bureau of Economic Analysis, the GDP rose by 0.2% during the same time.
This is the first time that nonresidential fixed investment declined since the first quarter of 2011, ABC reported.
Nonresidential fixed investment had been rising by more than 4% on an annualized basis during five of the previous six quarters.
Despite extreme weather across the country, nonresidential fixed investment expanded while energy prices were higher, causing the energy exploration, development, and distribution sectors to grow.
“Lower energy prices had an intense impact during the first quarter of 2015 and consumer spending was not enough to meaningfully offset the plummeting nonresidential fixed investment,” said ABC Chief Economic Anirban Basu. “Investment in equipment inched up just 0.1% and, while investment in intellectual property products expanded 7.8%, the third component, investment in structures, fell 23.1% during this year’s first quarter.”
Basu added that contractors and others in the building industry should remain positive in the continued expansion of the economy. Consumer spending is expected to pick up as the year goes on, which will help things return to normal levels during the second and third quarters of the year.
The following is first quarter performance of key segments:
- Personal consumption expenditures added 1.31% to GDP after contributing 2.98% in the fourth quarter.
- Spending on goods grew only 0.2% after a 4.8% increase in the fourth quarter.
- Real final sales of domestically products output – minus changes in private inventories – decreased 0.5% for the first quarter, after a 2.3% increase in the fourth quarter.
- Federal government spending expanded 0.3% in the first quarter following a 7.3% decrease in the prior quarter.
- Nondefense spending expanded 1.9% after increasing 1.5% in the fourth quarter of 2014.
- State and local government spending fell 1.5% during the first three months of the year after rising by 1.6% during the fourth quarter.
Related Stories
Multifamily Housing | Jan 31, 2015
20% down?!! Survey exposes how thin renters’ wallets are
A survey of more than 25,000 adults found the renters to be more burdened by debt than homeowners and severely short of emergency savings.
Multifamily Housing | Jan 31, 2015
Production builders are still shying away from rental housing
Toll Brothers, Lennar, and Trumark are among a small group of production builders to engage in construction for rental customers.
| Jan 30, 2015
Investment in nonresidential structures expands in fourth quarter
Real gross domestic product expanded 2.6% during the fourth quarter of 2014, following a 5% increase in the third quarter.
Energy Efficiency | Jan 28, 2015
An urban wind and solar energy system that may actually work
The system was designed to take advantage of a building's air flow and generate energy even if its in the middle of a city.
Multifamily Housing | Jan 27, 2015
Multifamily construction, focused on rentals, expected to slow in the coming years
New-home purchases, which recovered strongly in 2014, indicate that homeownership might finally be making a comeback.
Office Buildings | Jan 27, 2015
London plans to build Foggo Associates' 'can of ham' building
The much delayed high-rise development at London’s 60-70 St. Mary Axe resembles a can of ham, and the project's architects are embracing the playful sobriquet.
Multifamily Housing | Jan 22, 2015
Sales of apartment buildings hit record high in 2014
Investors bet big time on demand for rental properties over homeownership in 2014, when sales of apartment buildings hit a record $110.1 billion, or nearly 15% higher than the previous year.
| Jan 21, 2015
From technician to rainmaker: Making the leap in your career
Many AEC firms focus on training for the hard skills of the profession, not so much for business prowess, writes BD+C's David Barista.
Modular Building | Jan 21, 2015
Chinese company 3D prints six-story multifamily building
The building components were prefabricated piece by piece using a printer that is 7 meters tall, 10 meters wide, and 40 meters long.
| Jan 21, 2015
Tesla Motors starts construction on $5 billion battery plant in Nevada
Tesla Motors’ “gigafactory,” a $5 billion project on 980 acres in Sparks, Nev., could annually produce enough power for 500,000 electric cars.
