The U.S. economy grew at an annual rate of 2.6% in the fourth quarter of 2018, according to an Associated Builders and Contractors analysis of data published today by the U.S. Bureau of Economic Analysis. Year-over-year GDP growth was 3.1%, while average growth for 2018 was 2.9%.
“Today’s GDP report confirms continued strong investment in nonresidential segments in America,” said ABC Chief Economist Anirban Basu. “Separately, construction spending data show significant expenditures on the construction of data centers, hotel rooms, theme parks and fulfillment centers. These data also indicate stepped up public construction spending in categories such as transportation, education, and water systems. Despite that, today’s GDP release indicated that investment in nonresidential structures actually declined 4.2% on an annualized basis during last year’s fourth quarter. Despite that setback, this form of investment was up by 5% for the entirety of 2018.
“Undoubtedly, some attention will be given to the fact that the U.S. economy expanded by just shy of 3% in 2018,” said Basu. “Unless that figure is revised upward in subsequent releases, it will mean that America has failed to reach the 3% annual threshold since 2005. But while much attention will be given to a perceived shortfall in growth, the fourth quarter figure of 2.6% signifies that the U.S. economy entered this year with substantial momentum. Were it not for a weak residential construction sector, 3% growth would have been attained. Moreover, the data indicate strength in disposable income growth and in business investment.
“It is quite likely that the U.S. economy will expand at around 2% this year,” said Basu. “Though interest rates remain low and hiring is still brisk, a number of leading indicators suggest that the nation’s economy will soften somewhat during the quarters ahead, which can be partly attributed to a weakening global economy. This won’t unduly impact nonresidential construction activity, however, since the pace of activity in this segment tends to lag the overall economy, and strong nonresidential construction spending expected in 2019. Finally, ABC’s Construction Backlog Indicator continues to reflect strong demand for contractors, which have nearly nine months of work lined up.”
Related Stories
Market Data | Jun 21, 2019
Architecture billings remain flat
AIA’s Architecture Billings Index (ABI) score for May showed a small increase in design services at 50.2.
Market Data | Jun 19, 2019
Number of U.S. architects continues to rise
New data from NCARB reveals that the number of architects continues to increase.
Market Data | Jun 12, 2019
Construction input prices see slight increase in May
Among the 11 subcategories, six saw prices fall last month, with the largest decreases in natural gas.
Market Data | Jun 3, 2019
Nonresidential construction spending up 6.4% year over year in April
Among the 16 sectors tracked by the U.S. Census Bureau, nine experienced an increase in monthly spending, led by water supply and highway and street.
Market Data | Jun 3, 2019
4.1% annual growth in office asking rents above five-year compound annual growth rate
Market has experienced no change in office vacancy rates in three quarters.
Market Data | May 30, 2019
Construction employment increases in 250 out of 358 metros from April 2018 to April 2019
Demand for work is outpacing the supply of workers.
Market Data | May 24, 2019
Construction contractors confidence remains high in March
More than 70% of contractors expect to increase staffing levels over the next six months.
Market Data | May 22, 2019
Slight rebound for architecture billings in April
AIA’s ABI score for April showed a small increase in design services at 50.5 in April.
Market Data | May 9, 2019
The U.S. hotel construction pipeline continues to grow in the first quarter as the economy shows surprising strength
Projects currently under construction stand at 1,709 projects/227,924 rooms.
Market Data | May 9, 2019
Construction input prices continue to rise
Nonresidential input prices rose 0.9% compared to March and are up 2.8% on an annual basis.