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Nonresidential Building Construction Advances in December

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Nonresidential building construction spending increased 1.7% in December after inching up 0.1% in November. For 2011, spending fell 4.0% from 2010.

Nonresidential building construction spending increased 1.7% in December after inching up 0.1% in November. For 2011, spending fell 4.0% from 2010.

“For lease” private projects spending slipped 0.1% following a 1.2% increase in November, which was revised up from a previously reported decline of 0.3%. For the year, for lease spending decreased 3.4%. Hotel construction dropped 2.3% after rising 2.1% in November. For the year, the measure plummeted 24.8%. Office construction was essentially unchanged, down 0.1% in December, following an increase of 1.6% the previous month. For the year, it fell 8.4%.

Construction spending for institutional projects was down 0.2%, after rising 0.5% in November. For 2011, spending dropped 4.6%.

Manufacturing construction spending surged up 13.4% in December after falling 4.0% in November. Despite the strong finish and increasing in nine of the previous eleven months, manufacturing construction spending fell 3.3% in 2011.

Notwithstanding concerns about Europe and oil prices acting as a drag on the U.S. expansion and thus nonresidential construction spending, the forecast is for spending totals to strengthen throughout 2012 and 2013 as the economy continues to grow and companies see the need to expand to meet rising demand. Low long-term interest rates continue to be a positive for those contemplating proceeding with a project. Increasing domestic demand and greater exports to Asia and South America are expected to more than offset the likely slowdown in exports to Europe.

The forecast is for nonresidential construction spending to increase 5.4% in 2012 and to strengthen in 2013, growing 8.2%.

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

  Monthly Figures*
(latest actual values)
3-Month
Moving Average
Actual Forecast
  Oct-11 Nov-11 Dec-11 Oct-11 Nov-11 Dec-11 2008 2009 2010 2011 2012 2013
Lodging 8.447 8.623 8.428 8.547 8.576 8.499 35.806 25.499 11.329 8.515 8.862 9.738
  Month-over-Month % Change -2.4% 2.1% -2.3% 0.2% 0.3% -0.9%            
  Year-over-year % Change (NSA) -15.7% -14.6% -15.3%       24.7% -28.8% -55.6% -24.8% 4.1% 9.9%
Office 34.315 34.870 34.852 34.504 34.717 34.679 68.563 51.908 37.573 34.415 36.568 40.345
  -1.9% 1.6% -0.1% 0.1% 0.6% -0.1%            
  -5.8% -1.5% -1.9%       5.1% -24.3% -27.6% -8.4% 6.3% 10.3%
Commercial (mainly retail) 43.506 43.796 43.929 44.815 44.080 43.744 86.212 54.069 40.522 43.488 45.122 48.729
  -3.2% 0.7% 0.3% -1.8% -1.6% -0.8%            
  11.0% 12.2% 13.2%       -3.9% -37.3% -25.1% 7.3% 3.8% 8.0%
Health Care 38.615 39.207 39.723 40.087 39.624 39.182 46.902 44.845 39.879 39.694 41.432 45.159
  -5.9% 1.5% 1.3% -2.4% -1.2% -1.1%            
  -4.8% -4.7% -2.3%       7.2% -4.4% -11.1% -0.5% 4.4% 9.0%
Education 86.100 86.102 85.637 86.350 86.406 85.946 104.890 103.202 88.227 84.692 86.770 91.500
  -1.1% 0.0% -0.5% 0.7% 0.1% -0.5%            
  2.5% 3.1% 2.9%       8.4% -1.6% -14.5% -4.0% 2.5% 5.5%
Religious 4.042 3.875 3.972 4.140 4.020 3.963 7.225 6.192 5.208 4.152 4.121 4.417
  -2.4% -4.1% 2.5% 0.3% -2.9% -1.4%            
  -18.3% -23.2% -18.5%       -4.2% -14.3% -15.9% -20.3% -0.7% 7.2%
Public Safety 9.667 10.124 9.929 9.911 9.873 9.907 13.083 13.787 11.118 9.895 10.072 10.270
  -1.6% 4.7% -1.9% 0.2% -0.4% 0.3%            
  -6.4% -0.6% 2.4%       28.3% 5.4% -19.4% -11.0% 1.8% 2.0%
Amusement/Recreation 15.852 15.810 15.576 15.856 15.935 15.746 21.829 19.404 16.959 15.527 16.401 17.536
    -0.3% -1.5% 0.8% 0.5% -1.2%            
  -6.7% -7.8% -4.1%       2.9% -11.1% -12.6% -8.4% 5.6% 6.9%
Manufacturing 40.860 39.239 44.479 40.555 40.221 41.526 53.234 56.836 38.106 36.868 42.763 48.455
  0.7% -4.0% 13.4% 4.1% -0.8% 3.2%            
  19.3% 20.4% 41.8%       31.0% 6.8% -33.0% -3.2% 16.0% 13.3%
Total** 281.404 281.646 286.525 284.764 283.453 283.192 437.744 375.742 288.921 277.246 292.110 316.148
  -2.1% 0.1% 1.7% 0.2% -0.5% -0.1%            
  1.7% 2.8% 6.2%       8.4% -14.2% -23.1% -4.0% 5.4% 8.2%

* Monthly figures are seasonally adjusted at annual rates (SAAR figures).
** 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

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