Nonresidential construction spending in July saw its highest year-over-year percentage increase since April 2008, according to the Associated Builders and Contractors (ABC) analysis of U.S. Census Bureau data.

Source: U.S. Department of Commerce
Source: U.S. Department of Commerce

Spending expanded 0.5 percent in July and is up 12.7 percent since July 2014. On a seasonally adjusted, annualized basis, nonresidential construction spending totaled $696.1 billion in July, its best reading since March 2009.

“A number of forces are at work and are conspiring to help push nonresidential construction spending higher,” says Anirban Basu, ABC’s chief economist. “Perhaps most importantly, job growth remains robust, helping to drive down office and other vacancy rates, prompting more construction starts. Recreational and business travel spending has been trending higher, helping to support construction in the lodging and amusement categories on a year-over-year basis.

“… For now, the outlook for nonresidential construction spending remains upbeat, as the positives significantly outweigh the negatives. Trends in aggregate spending tend to lag the broader economy by roughly a year and the second quarter gross domestic product growth estimate of 3.7 percent is consistent with the notion that the broader economic recovery remains an ongoing one.”

Manufacturing-related construction spending grew 4.8 percent in June and is up 62.1 percent for the year, while office-related construction spending expanded 1.2 percent in July and is up 26.1 percent from the same period one year ago.

Religious spending grew 5.7 percent for the month and is up 7.3 percent from the same time last year.

Education-related construction spending fell 2.2 percent for the month but is up 3.6 percent on a year-over-year basis, while commercial construction spending fell 1.5 percent in July but jumped 5.5 percent on a year-over-year basis.

Health care-related construction spending fell 0.5 percent for the month but is up 6.4 percent for the year, and lodging-related construction spending fell 0.7 percent on a monthly basis but spiked 40.3 percent year-over-year.

Amusement and recreation-related construction spending fell 5.3 percent on a monthly basis but has increased 34.3 percent over the year.