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Nonresidential Building Construction Spending Rebounds in October

0 3853 Market Intelligence

Nonresidential building construction spending rose 0.8% at a seasonally adjusted (SA) rate in October rebounding from September’s 0.6% decline. August spending was revised up $3.5 billion (1.2% of the previously reported amount) and September spending was revised up $5.9 billion (2.0% of the previously reported amount). Not seasonally adjusted (NSA) year-to-date spending was 6.6% higher than the same period a year ago.

Nonresidential building construction spending rose 0.8% at a seasonally adjusted (SA) rate in October rebounding from September’s 0.6% decline. August spending was revised up $3.5 billion (1.2% of the previously reported amount) and September spending was revised up $5.9 billion (2.0% of the previously reported amount). Not seasonally adjusted (NSA) year-to-date spending was 6.6% higher than the same period a year ago.

“For lease” private projects spending bounded up 1.8% (SA) in October after tumbling 1.1% in September. Year-to-date for lease spending increased 8.7% from a year earlier. Lodging construction spending snapped back 3.9% in October after plunging 3.9% in September. Office construction spending advanced 1.2% in after dropping 1.7% in September. October retail construction spending jumped 1.7% following no change in September. On a year-to-date basis through October, lodging spending was up 25.9%, office construction spending was up 4.3%, and retail construction spending was up 8.8% over the same period in 2011.

Construction spending for institutional projects in October increased 1.4% after decreasing 1.2% the previous month. On a year-to-date basis, spending was 1.8% higher than the same period a year ago. All the categories in this group increased in October and on a year-to-date basis only religious construction spending was lower than a year ago, down 7.9%.

Manufacturing construction spending plunged 2.7% in October after soaring 2.4% in September. Despite the sharp drop, year-to-date spending was up 21.0% over the same period a year ago.

U.S. Nonresidential Construction
(billions of U.S. current dollars)

  Monthly Figures (1)
(latest actual values)
3-Month Moving Average Year-to-Date (NSA)
  Aug-12 Sep-12 Oct-12 Aug-12 Sep-12 Oct-12 Jan-11 to
Oct-11
Jan-12 to
Oct-12
For Lease 96.4 95.3 97.0 94.7 95.1 96.2 72.5 78.8
  Month-over-Month
  % Change
2.8% -1.1% 1.8% 0.6% 0.5% 1.1%    
  Year-over-year
  % Change (NSA)
6.5% 5.3% 10.5%       -3.7% 8.7%
     Lodging 11.6 11.1 11.6 11.5 11.4 11.4 7.3 9.1
  0.0% -3.9% 3.9% 1.9% -0.7% 0.0%    
  30.7% 24.2% 29.4%       -26.8% 25.9%
     Office 37.3 36.6 37.1 36.4 36.6 37.0 29.0 30.2
  3.9% -1.7% 1.2% 1.1% 0.7% 1.1%    
  7.3% 0.5% 8.7%       -9.6% 4.3%
     Commercial
     (mainly retail)
47.5 47.5 48.3 46.8 47.1 47.8 36.3 39.5
  2.6% 0.0% 1.7% 0.0% 0.6% 1.4%    
  1.7% 5.7% 8.3%       8.8% 8.8%
Institutional 157.8 155.9 158.0 157.5 156.8 157.2 129.9 132.3
  0.7% -1.2% 1.4% 0.4% -0.4% 0.3%    
  0.6% -2.4% 2.5%       -5.0% 1.8%
     Health Care 42.6 39.6 40.3 41.5 41.0 40.8 33.0 34.0
  4.0% -7.1% 1.8% 1.0% -1.2% -0.5%    
  5.5% -2.4% 4.0%       0.9% 3.1%
     Education 85.3 85.7 86.9 86.1 85.7 85.9 71.5 72.9
  -0.8% 0.4% 1.4% 0.5% -0.5% 0.3%    
  -1.3% -2.4% 1.8%       -5.8% 2.0%
     Religious 3.8 3.8 3.9 3.9 3.8 3.8 3.5 3.3
  -2.4% -1.9% 3.1% 0.1% -0.8% -0.4%    
  -14.6% -11.4% -4.4%       -19.5% -7.9%
     Public Safety 10.1 10.2 10.3 10.1 10.1 7.7 8.4 8.6
  1.0% 1.3% 0.7% -1.7% 0.2% -24.3%    
  -7.3% -1.8% 2.5%       -11.1% 2.3%
     Amusement/
     Recreation
16.0 16.7 16.8 15.9 16.2 16.5 13.4 13.5
  0.4% 3.9% 0.5% -0.3% 1.9% 1.6%    
  1.8% 1.4% 6.3%       -5.5% 0.1%
Manufacturing 48.0 49.1 47.8 48.2 48.2 48.3 33.0 40.0
  0.9% 2.4% -2.7% -1.7% 0.0% 0.2%    
  7.6% 4.6% 5.0%       -4.8% 21.0%
Total (2) 302.2 300.3 302.8 300.4 300.2 301.8 235.4 251.1
  1.4% -0.6% 0.8% 0.1% -0.1% 0.5%    
  2.9% 1.1% 5.5%       -4.6% 6.6%

(1) Monthly figures are seasonally adjusted at annual rates (SAAR figures).
(2) Total may not equal the sum of its components due to rounding.
Source: Census Bureau, U.S. Department of Commerce. Calculations: Reed Construction Data

The Forecast
In spite of the risks of the possibility of sovereign debt default by one or more European countries, one or more countries abandoning the euro, failure to avoid the fiscal cliff, hitting the federal debt ceiling, and energy prices rising significantly for a prolonged period, the Reed Economics forecast is for the U.S. economy to avoid recession and continue to expand with some modest strengthening of the growth path.

Nonresidential construction spending is forecast to increase 5.9% in 2012, 5.4% in 2013, and 8.4% in 2014.

U.S. Nonresidential Construction
(billions of U.S. current dollars)

  Actual Forecast
  2009 2010 2011 2012 2013 2014
For Lease 131.5 88.9 87.1 94.3 101.0 109.3
   Year-over-year % Change -31.0% -32.4% -2.1% 8.3% 7.1% 8.2%
     Lodging 25.5 11.6 8.9 11.1 12.5 13.7
-28.8% -54.4% -23.7% 25.0% 12.3% 10.3%
     Office 51.9 37.9 34.6 36.2 38.8 42.0
  -24.3% -27.1% -8.5% 4.4% 7.4% 8.1%
     Commercial (mainly retail) 54.1 39.5 43.6 47.1 49.7 53.6
-37.3% -27.0% 10.4% 8.0% 5.7% 7.8%
Institutional 187.4 161.1 154.7 157.2 162.1 172.8
  -3.4% -14.0% -4.0% 1.6% 3.1% 6.7%
     Health Care 44.8 39.3 39.7 40.9 42.9 46.6
-4.4% -12.3% 0.9% 3.1% 4.8% 8.7%
     Education 103.2 88.4 84.3 85.8 87.7 92.9
  -1.6% -14.3% -4.6% 1.7% 2.2% 6.0%
     Religious 6.2 5.3 4.2 3.9 3.8 4.0
-14.3% -14.6% -20.1% -7.6% -1.7% 4.9%
     Public Safety 13.8 11.2 10.2 10.4 10.5 10.9
5.4% -19.1% -8.2% 1.6% 1.1% 3.6%
     Amusement/Recreation 19.4 16.9 16.2 16.2 17.1 18.4
-11.1% -12.7% -4.5% 0.1% 5.9% 7.3%
Manufacturing 56.8 40.4 41.4 48.4 52.9 60.4
  6.8% -29.0% 2.6% 16.9% 9.3% 14.2%
Total (1) 375.7 290.4 283.1 299.9 316.0 342.5
-14.2% -22.7% -2.5% 5.9% 5.4% 8.4%

(1) Total may not equal the sum of its components due to rounding.
Source: Census Bureau, U.S. Department of Commerce. Forecast: Reed Construction Data.

by Bernie Markstein last update:Dec 21, 2012

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