Australia and New Zealand Construction Forecast 2019
Parramatta Powerhouse Opens Door for Applications
Call for Stronger Oversight and Enforcement of Building Products
Solid Start to Construction Pipeline 2019
The Latest Buzz Around Electric Vehicles in Construction
A Look into Sydney's Australian Technology Park
How We Can Build for Extremes Without Blowing Budgets
Independent Review of Engineering Design Vital for Quality & Safety
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 AEC industry relies on drawings for everything, from the external site plan and interior layout to the punch list and RFIs. According to Home Improvement Pages, a custom-designed residential ho... Read More
Construction work as we well know is a team effort, requiring the synchronization of workers, equipment and materials. And just as construction wo... Read More
Listen in to this free webinar with Carey Larsen, Social Marketing Manager at Procore, Bob Gardner, CEO of Gardner Builders, and Jessica Stoe, Bran... Read More
At a rural Ohio job site, Wieland Construction and its subcontractors are managing progress entirely from mobile devices — an investment they say h... Read More
The majority of project leaders and teams on site today still utilize outdated, manual tools and processes—even though there are plenty of technolo... Read More
Keeping workers safe on road construction sites is an ongoing problem, underlined by the fact that the number of fatalities at these sites increase... Read More
Automation has improved by leaps and bounds over the last decade, and the technology is proving viable as more companies start to incorporate some ... Read More