Tighter Lending Impacts Apartment Construction
Green Living Moves into the Mainstream
Aged-Care Developments Reaching New Heights
Smart Cranes are Transforming the Jobsite
The Shaping of Australia's Future Cities Through Urban Renewal
The True Spirit of the Gold Coast
Timber Software Helping Aussie Builders Branch Out
To Ban or Not to Ban: Grappling with Composite Cladding Rules
By Anirban Basu
November 13, 2017
Spending Growth in September Partially Offsets Prior Periods of Weakness
Census Bureau data indicates that nonresidential construction spending increased to $698.1 billion in September, representing a 0.5% increase over the previous month. However, nonresidential construction spending is down 2.9% on an annual basis, and spending has not been this low since 2015.
Nonresidential construction spending is down 2.9% on an annual basis, and spending has not been this low since 2015.
A number of key construction categories have registered declines in spending over the last twelve months for which data are available, including manufacturing (-20.3%), religious structures (-12.4%), sewage and waste disposal (-10.7%), water supply (-9.2%), power (-8.9%), and conservation and development (-7.7%). The Census Bureau revised figures for previous months upward by a combined $11 billion, however.
The year-over-year decline in nonresidential construction spending appears counterintuitive. There is, after all, an abundance of positives characterizing current economic activity. That country has added 1.8 million net new positions over the past year, with the official unemployment rate dropping to a 16-year low. Asset prices, including equity prices, have surged, boosting household wealth in the process. The global economy has strengthened and it is expected to grow even faster in 2018; export activity has begun to solidify. Business spending remains stable.
Moreover, collectively, construction firms continue to increase staffing levels. One would think this would be consistent with construction spending growth. One possibility is that construction firms are being induced to replace each retiring, often highly skilled worker with more than one staff member. This is consistent with higher employment, diminished industry productivity (measured in terms of output per hour worked), stagnant industry output, and potentially shrinking profit margins. That said, nonresidential construction spending should begin to expand faster in coming months, with manufacturing and power representing likely sources of improvement.
Nonresidential Spending Growth, Millions of Dollars, Seasonally Adjusted Annual Rate
Source: U.S. Census Bureau
Low Inflation + Low Interest Rates + Steady Economic Growth = Surging Asset Prices
The widest used rating system for green building is Leadership in Energy and Environmental Design (LEED), developed by the U.S. Green Building Council (USGBC). It’s no surprise, then, that major U.... Read More
July 1, 2018
Hear Brad Hyatt, Associate Professor at California State University Fresno, discuss what students are learning in school to prepare them for const... Read More
Budget. Schedule. Quality. The trifecta of a project. But balancing that trifecta isn't easy to do. Our webinar, led by construction industry exper... Read More
Building in the "Big Easy" sometimes isn't. The challenges faced by Landis Construction aren't often understood by out-of-towners, because when it'... Read More
The acquisition and maintenance of heavy machinery is a major expense for any size company, so it stands to reason that equipment is worth taking s... Read More
Estimating mistakes cost contractors plenty. And, with the demand from customers for estimates on-the-fly, the chances of missing the mark increase... Read More
In all big construction projects, time is money, and few projects drag along as painfully slow as high-rise buildings. A new method of construction... Read More
June 25, 2018