ABC Construction Economic Update: Nonresidential Fixed Investment in Structures Expands 4.6%

Nonresidential fixed investment in structures expanded 4.6 percent on an annualized basis during the second quarter of 2013, according to the July 31 gross domestic product report by the U.S. Commerce Department. This increase followed a 4.6 percent decline in the first quarter of the year.

Fixed investment in equipment rose 4.1 percent in the second quarter and overall investment in structures expanded 6.8 percent. Residential fixed investment increased 13.4 percent following 12.5 percent expansion in the first quarter. Fixed investment in the nation's residential sector has been growing at a double-digit clip since the third quarter of 2012.

Personal consumption expenditures expanded 1.8 percent in the second quarter, with spending on goods rising 3.4 percent.   Expenditures on services, on the other hand, advanced slightly at 0.9 percent. Expansion in real private inventories contributed 0.4 percentage points to real GDP growth for the second quarter after adding 0.9 percent during the first quarter.

Federal government expenditures declined 1.5 percent during the second quarter primarily due to a 3.2 percent drop in non-defense spending. Meanwhile, national defense spending dropped 0.5 percent.   State and local government spending rebounded mildly, growing only 0.3 percent during the second quarter following three consecutive quarters of declines.

In total, real GDP expanded 1.7 percent during the second quarter following a revised 1.1 increase in the first quarter of the year.

“ABC continues to forecast roughly 2 percent growth in the U.S. economy in 2013, though the first half was associated with sub-2 percent growth,” said Associated Builders and Contractors Chief Economist Anirban Basu. “It remains likely that the economy will accelerate a bit during the second half of the year, but there continues to be headwinds such as rising interest rates, sequestration and a loss in municipal confidence in the aftermath of Detroit's bankruptcy.