National nonresidential spending increased 0.1% in October, according to an Associated Builders and Contractors analysis of U.S. Census Bureau data released today. Total nonresidential spending for the month stood at $763.8 billion on a seasonally adjusted annualized rate, which represents a 7.3% increase over the same time last year.Â
Thirteen out of 16 subsectors are associated with year-over-year increases, with the exceptions being religious (-9.1%), communication (-4.7%), and health care (-1%). Water supply (+23%), lodging (+18.9%) and amusement and recreation (+16.2%) have generated the largest increases among nonresidential construction segments over the past 12 months.
“It is remarkable that the construction spending cycle remains firmly in place despite worker shortages, tariffs, rising materials prices, financial market volatility, more restrictive monetary policy, evidence of a slowing global economy and an abundance of political controversies,” said ABC Chief Economic Anirban Basu. “With backlog still elevated, nonresidential construction spending will enter 2019 with plentiful momentum.Â
“It is true that not all construction spending segments have participated in the industry’s recovery. However, the number of segments experiencing negative spending growth is small and the expectation is that a turnaround in spending is likely in at least one of these categories,” said Basu. “The religious category (-9.1% year-over-year) represents less than 1% of total nonresidential construction spending. Demographic forces and a strong economy should translate into growing demand for healthcare services, which will eventually trigger more construction in the health care category (-1%), including in the form of outpatient medical centers.Â
“While there will always be reasons to fret about the economic outlook, 2018 will go down as a fine year for the U.S. economy and for the nation’s nonresidential construction sector,” said Basu. “That said, while demand for construction services remained strong throughout the year, many contractors indicate that profit margins are under pressure. Given the ongoing dearth of available, skilled construction workers, that is likely to continue into 2019. However, materials price dynamics could be far different given a slowing global economy and expectations for a strong U.S. dollar next year.”
Â
*Correction: This press release originally classified data centers as a component of the communications category. Data centers are instead a component of the office category.
Â
Related Stories
Multifamily Housing | Nov 7, 2019
Multifamily construction market remains strong heading into 2020
Fewer than one in 10 AEC firms doing multifamily work reported a decrease in proposal activity in Q3 2019, according to a PSMJ report.
Market Data | Nov 5, 2019
Construction and real estate industry deals in September 2019 total $21.7bn globally
In terms of number of deals, the sector saw a drop of 4.4% over the last 12-month average.
Market Data | Nov 4, 2019
Nonresidential construction spending rebounds slightly in September
Private nonresidential spending fell 0.3% on a monthly basis and is down 5.7% compared to the same time last year.
Market Data | Nov 1, 2019
GDP growth expands despite reduction in nonresident investment
The annual rate for nonresidential fixed investment in structures declined 15.3% in the third quarter.
Market Data | Oct 24, 2019
Architecture Billings Index downturn moderates as challenging conditions continue
The Architecture Billings Index (ABI) score in September is 49.7.
Market Data | Oct 23, 2019
ABC’s Construction Backlog Indicator rebounds in August
The primary issue for most contractors is not a lack of demand, but an ongoing and worsening shortage of skilled workers available to meet contractual requirements.
Multifamily Housing | Oct 16, 2019
A new study wonders how many retiring adults will be able to afford housing
Harvard’s Joint Center for Housing Studies focuses on growing income disparities among people 50 or older.
Market Data | Oct 9, 2019
Two ULI reports foresee a solid real estate market through 2021
Market watchers, though, caution about a “surfeit” of investment creating a bubble.
Market Data | Oct 4, 2019
Global construction output growth will decline to 2.7% in 2019
It will be the slowest pace of growth in a decade, according to GlobalData.
Market Data | Oct 2, 2019
Spending on nonresidential construction takes a step back in August
Office, healthcare, and public safety are among the fastest-growing sectors, according to the U.S. Census Bureau's latest report.Â