Nonresidential Spending Retains Momentum in October
Nonresidential construction spending expanded in October for the third consecutive month (September’s estimate was revised higher than August’s) according to analysis of U.S. Census Bureau data released by Associated Builders and Contractors Dec. 1, 2015. Nonresidential construction spending totaled $701.8 billion in October on a seasonally adjusted annualized rate, a 1 percent increase on a monthly basis and an 11 percent increase on a yearly basis.
Private sector nonresidential construction spending added 0.6 percent for the month, reaching a total of $403.4 billion. Nonresidential spending in the public sector gained 1.4 percent from September, totaling $298.4 billion.
“The data tell a simple story: October was a strong month for nonresidential construction spending,” said ABC Chief Economist Anirban Basu. “Interestingly, in October, publicly financed construction spending expanded more rapidly than private construction spending, representing a stark reversal from prior years when construction’s recovery was motivated almost exclusively by private spending growth. There is reason to believe that public finances will continue to improve, which should help bolster nonresidential construction’s fortunes into 2016.
“One could question, of course, what factors are driving positive construction spending outcomes and whether or not those factors will remain in place,” said Basu. “Those are more complex questions, but even they can be answered with some degree of satisfaction. Construction spending continues to be supported by ongoing improvement in state and local government finances, inexpensive money, availability of both debt and equity to finance projects, growing demand for office and other forms of space, and added levels of confidence among key economic actors.
Spending increased in 10 of 16 nonresidential construction sectors on a monthly basis in October:
Spending in six of the nonresidential construction subsectors fell in October on a monthly basis: