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.
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.
“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.
“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.”
*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.
Related Stories
Market Data | May 7, 2019
Construction costs in major metros continued to climb last year
Latest Rider Levett Bucknall report estimates rise at more than double the rate of 2018 Growth Domestic Product.
Market Data | Apr 29, 2019
U.S. economic growth crosses 3% threshold to begin the year
Growth was fueled by myriad factors, including personal consumption expenditures, private inventory investment, surprisingly rapid growth in exports, state and local government spending and intellectual property.
Market Data | Apr 18, 2019
ABC report: 'Confidence seems to be making a comeback in America'
The Construction Confidence Index remained strong in February, according to the Associated Builders and Contractors.
Market Data | Apr 16, 2019
ABC’s Construction Backlog Indicator rebounds in February
ABC's Construction Backlog Indicator expanded to 8.8 months in February 2019.
Market Data | Apr 8, 2019
Engineering, construction spending to rise 3% in 2019: FMI outlook
Top-performing segments forecast in 2019 include transportation, public safety, and education.
Market Data | Apr 1, 2019
Nonresidential spending expands again in February
Private nonresidential spending fell 0.5% for the month and is only up 0.1% on a year-over-year basis.
Market Data | Mar 22, 2019
Construction contractors regain confidence in January 2019
Expectations for sales during the coming six-month period remained especially upbeat in January.
Market Data | Mar 21, 2019
Billings moderate in February following robust New Year
AIA’s Architecture Billings Index (ABI) score for February was 50.3, down from 55.3 in January.
Market Data | Mar 19, 2019
ABC’s Construction Backlog Indicator declines sharply in January 2019
The Construction Backlog Indicator contracted to 8.1 months during January 2019.
Market Data | Mar 15, 2019
2019 starts off with expansion in nonresidential spending
At a seasonally adjusted annualized rate, nonresidential spending totaled $762.5 billion for the month.