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Nonresidential Sector Spending Growth Falters in June

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Nonresidential construction spending fell during June after posting significant gains the previous two months, but remains 4.6% higher than a year ago, according to the U.S. Census Bureau. Spending for June totaled $588.8 billion on a seasonally adjusted, annualized basis, a 2.8% drop from the upwardly revised $605.6 billion in nonresidential construction spending from the previous report.

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“The monthly decline in spending should not be cause for significant alarm,” said Associated Builders and Contractors Chief Economist Anirban Basu. “The impact of a brutal winter continues to manifest itself in the data. A considerable volume of construction was postponed during the year’s initial months, with some of that construction taking place in April and May, artificially boosting activity during those months.

“Accordingly, June doesn’t look particularly good from a month-over-month perspective, but from a year-over-year perspective, the growth in spending looks perfectly adequate,” Basu added. “Stakeholders should not have anticipated an upbeat June number in any case after national nonresidential construction employment expanded by just 100 people that month.”

“With job growth accelerating, consumer outlays expanding, industrial production rising and energy production surging, the outlook for nonresidential construction remains good,” said Basu. “The next few months should be associated with improving performance, if not on a monthly basis, then on a year-over-year one.”

Five of 16 nonresidential construction subsectors posted increases in spending in June on a monthly basis.

• Office-related construction spending grew by 0.4% and is up 20.7% from the same time a year ago.

• Religious spending grew 0.7% for the month and is up 4.3% from the same time last year.

• Sewage and waste disposal-related construction spending gained 0.3% for the month and has grown 7.8% on a 12-month basis.

• Conservation and development-related construction spending expanded by 13.5% for the month and is up 47.6% on a yearly basis.

• Health care-related construction spending grew 2.5% for the month but is down 5.6% on an annual basis.

Spending in 11 nonresidential construction subsectors declined in June.

• Manufacturing-related spending fell 0.4% on a monthly basis but is up 8.4% from the same time last year.

• Education-related construction spending fell 4% for the month and is down 6% on a year-over-year basis.

• Commercial construction spending fell 1.4% in June but is up 9.7% on a year-over-year basis.

• Lodging construction spending is down 3% on a monthly basis but is up 19% on a year-over-year basis.

• Spending in the water supply category fell 4.5% both monthly and yearly.

• Construction spending in the transportation category fell 0.6% on a monthly basis but has expanded by 6% on an annual basis.

• Amusement and recreation-related construction spending fell 1.1% on a monthly basis but is up 9.2% from the same time last year.

• Highway and street-related construction spending fell 10.4% in June and is down 8.5% compared to the same time last year.

• Communication construction spending fell 4.9% for the month and is down 12.9% from the same time last year.

• Public safety-related construction spending fell 2.4% on a monthly basis and has declined 5.1% on a year-over-year basis.

• Power construction spending fell 3.3% for the month but is 19% higher than at the same time a year ago.

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