National nonresidential construction spending expanded 0.7% in August to its highest level since the U.S. Census Bureau began the data series in 2002, according to an Associated Builders and Contractors analysis released today.
Total nonresidential spending stood at $762.7 billion on a seasonally adjusted, annualized rate in August, which represents an increase of 8.4% compared to one year ago. Private nonresidential spending fell 0.2% in August largely due to a 1.3% decline in power-related spending, the largest private construction spending category, and public nonresidential spending increased 2%.
“The good news on the nation’s economy and the construction sector just keeps coming,” said ABC Chief Economist Anirban Basu. “The increase in overall nonresidential construction spending was reasonably predictable given the predominance of positive leading indicators such as ABC’s Construction Backlog Indicator, which reported record-setting 9.9 months of backlog in the second quarter of this year, and the Architectural Billings Index. In addition, the recent pattern of stable private construction spending coupled with growing public spending remained in place in August.
“Rising property values, ongoing rapid job creation and a confident consumer translates into rising real estate values, income and retail sales tax collections, which in turn creates additional resources to invest in infrastructure,” said Basu. “That helps explain the chunky year-over-year spending increases in a number of primarily publicly financed categories, including water supply, which increased 37%; conservation and development, 34%; transportation, 23%; and highway/street, 14%.
“It is quite possible that construction spending growth will accelerate from current levels,” said Basu. “Aside from the strong economy, ongoing increases in materials prices and worker compensation is translating into rising project delivery costs, which, all things being equal, produces faster construction spending growth.
“For now, rising construction and borrowing costs are not stifling economic activity,” said Basu. “However, purchasers of construction services may be increasingly inclined to postpone projects if costs continue to rise, which is likely. And while contractors remain concerned about the overall construction workforce shortage negatively affecting project deadlines, the near-term outlook remains robust.”
Related Stories
Sponsored | | Nov 26, 2014
What’s in a coating?
A beautiful coating on metal products can make a strong statement, whether used on a high-end commercial project or an industrial building. SPONSORED CONTENT
Sponsored | | Nov 26, 2014
Virtual reality in 3D models, iPhone thermal imaging: Inside one very cool tech toybox
A little over a year ago, I embarked on a search to find individuals in the AEC space who were putting new hardware to work in the field.
| Nov 25, 2014
Behnisch Architekten unveils design for energy-positive building in Boston
The multi-use building for Artists For Humanity that is slated to be the largest energy positive commercial building in New England.
| Nov 25, 2014
Study: 85% of employees dissatisfied with their office environment
A vast majority of office workers feel open floor plans cause multiple distractions and that more private spaces are needed in today's offices, according to a new study by Steelcase and research firm IPSOS.
| Nov 25, 2014
Emerging design and operation strategies for the ambulatory team in transition
As healthcare systems shift their care models to be more responsive to patient-centered care, ambulatory care teams need to be positioned to operate efficiently in their everyday work environments, write CannonDesign Health Practice leaders Tonia Burnette and Mike Pukszta.
| Nov 24, 2014
Midsize construction firms see a brighter business horizon
Uncertainty about government spending clouds an otherwise positive economic outlook among 59 middle market construction firms polled recently by GE Capital.
| Nov 24, 2014
Adrian Smith + Gordon Gill-designed crystalline tower breaks ground in southwestern China
Fitted with an LED façade, the 468-meter Greenland Tower Chengdu will act as a light sculpture for the city of Chengdu.
| Nov 21, 2014
Rental apartment construction soars to 27-year high: WSJ report
The multifamily sector is now outpacing the peak construction rate in the previous housing cycle, in 2006, according to the WSJ.
| Nov 21, 2014
Nonresidential Construction Index rises in fourth quarter
There are a number of reasons for optimism among respondents of FMI's quarterly Nonresidential Construction Index survey, including healthier backlogs and low inflation.
| Nov 21, 2014
NCARB: Number of architects in U.S. grows 1.6% in 2014, surpasses 107,500
The architecture profession continues to grow along with a gradually recovering economy, based on the results of the 2014 Survey of Architectural Registration Boards, conducted by the National Council of Architectural Registration Boards.
