Nonresidential Construction Spending Dips in November

Nonresidential construction spending fell 1 percent on a monthly basis in November, but has still managed to expand 4 percent on a year-over-year basis according to the recent release from the U.S. Census Bureau. Spending for the month totaled $617 billion on a seasonally adjusted, annualized basis. Moreover, the government revised the October spending figure up from $611.8 billion to $622.9 billion.

“November’s drop in nonresidential construction spending ends four consecutive months of spending growth, but represents only a minor dip in the industry’s momentum,” said Associated Builders and Contractors Chief Economist Anirban Basu. “November’s figure would have represented a continuation of nonresidential spending’s steady recovery were it not for a sizable upward revision to October’s data (+$11.1 billion). Through the first 11 months of 2014, nonresidential spending is up 6.6 percent from the same point in 2013 and with only December’s spending data yet to be revealed, it is a near certainty that yearly nonresidential spending will top the $600 billion mark for the first time in the past five years.

“Conditions remain conducive to continued construction spending growth,” said Basu. “Both the quantity and quality of job growth continues to improve, which will fuel the ongoing recovery in office-related spending. The dip in oil prices may provide the strongest headwind for construction spending growth. Not only will inexpensive fuel greenlight construction projects that may otherwise be stalled, it also serves to boost consumer spending. This in turn may lead to more construction starts, specifically in the lodging and amusement and recreation categories.”

Five of 16 nonresidential construction subsectors posted increases in spending in November on a monthly basis.

• Lodging construction spending ticked up 0.1 percent on a monthly basis and is up 11.3 percent on a year-over-year basis.
• Communication construction spending expanded 0.5 percent for the month, but is down 17.5 percent on an annual basis.
• Sewage and waste disposal-related construction spending gained 2.6 percent for the month and has grown 13.6 percent on a 12-month basis.
• Highway and street-related construction spending grew 0.3 percent in November and is up 5.7 percent compared to the same time last year.
• Power construction spending grew 0.3 percent for the month and is 5.7 percent higher than at the same time one year ago.

Spending in 11 nonresidential construction subsectors declined in November.

• Conservation and development-related construction spending fell 6.5 percent for the month but is up 29 percent on a yearly basis.
• Healthcare-related construction spending fell 4.4 percent for the month and is down 7.5 percent on an annual basis.
• Education-related construction spending fell 2 percent for the month and is up 3.2 percent on a year-over-year basis.
• Spending in the water supply category fell 1.6 percent from October and down 2.3 percent lower than at the same time last year.
• Construction spending in the transportation category fell 0.3 percent on a monthly basis but has expanded by 5.3 percent on an annual basis.
• Public safety-related construction spending fell 5.3 percent on a monthly basis and is down 8.6 percent on a year-over-year basis.
• Commercial construction spending lost 1.9 percent in November but is up 8.4 percent on a year-over-year basis.
• Office-related construction spending fell by 1.7 percent in November but is up 14.7 percent from the same time one year ago.
• Manufacturing-related spending was flat in November and is up 21 percent on a year-over-year basis.
• Amusement- and recreation-related construction spending fell 2.2 percent on a monthly basis and is up 4.8 percent from the same time last year.
• Religious spending fell 2.9 percent for the month and is down 0.3 percent from the same time last year.