Nonresidential construction spending saw a dip in August, according to recently released data from the U.S. Census Bureau. Nonresidential construction spending shrank 1.2 percent on a monthly basis in August, though it has still managed to expand 6 percent year-over-year.
Spending for the month totaled $603.7 billion on a seasonally adjusted, annualized basis. The government also revised the July spending figure down from $617.8 billion to $611.3 billion.
“This is why it is never a good idea to get excited about one month of data,” says Associated Builders and Contractors chief economist Anirban Basu. “After a significant acceleration in spending in July, August’s report depicts a steady but unspectacular recovery. Based on various industry surveys, including ABC’s own confidence and backlog indicators, the steady pace of recovery will continue.”
He adds, “Macroeconomic fundamentals remain promising for growth moving forward. Job growth has been reasonably steady during the past 12 months and the quality of jobs added to the economy has improved during the course of the current year, which helps explain the ongoing recovery in office-related spending. Federal Reserve policy remains accommodative and interest rates remain benign, which will help support business investment, including in construction, going forward. Consumer spending also should help prompt additional construction, including in the lodging and amusement/recreation categories.”
Seven of 16 nonresidential construction subsectors posted increases in spending in August on a monthly basis. Office-related construction spending grew 1.1 percent in August and is up 18.9 percent from the same time one year ago, while manufacturing-related spending grew 1.7 percent on a monthly basis and is up 14.5 percent on an annual basis. Lodging construction spending is up 0.9 percent on a monthly basis and is up 10.2 percent on a year-over-year basis.
Meanwhile, spending in nine nonresidential construction subsectors declined in August. Conservation and development-related construction spending fell 2.5 percent for the month, but is up 19.8 percent on a yearly basis. Healthcare-related construction spending fell 0.6 percent for the month and is down 6.6 percent for the year, and education-related construction spending fell 2 percent for the month and is down 1.9 percent on a year-over-year basis.