Nonresidential Construction Continues to Struggle

By March 1, 2013Economy

The Census Bureau said that construction spending decreased 2.1 percent in January, the first decline in 10 months. Private, nonresidential construction activity fell 5.1 percent for the month, which was the main reason for the lower total figure. Residential spending was unchanged, and public construction activity declined 1.0 percent. Still, looking at a longer time frame, construction was up 7.1 percent year-over-year, with private housing construction increasing a whopping 22.0 percent and nonresidential activity rose 4.0 percent.

For manufacturers, the value of construction projects in January was 2.9 percent lower than in December, falling from $52.2 billion to $50.6 billion for the month. Still, December’s construction activity appears to be a bit of an outlier. If you were to exclude December from the analysis, there would be a clear upward trend in the manufacturing sector data from July’s value of $46.6 billion. The largest gains during that time frame appear to be in the food, beverage, and tobacco; chemical; and nonmetallic mineral sectors.

Looking private, nonresidential construction as a whole, the figures were mostly mixed. On a year-over-year basis, the strongest increases in construction activity occurred in the office (up 26.2 percent), lodging (up 13.3 percent), manufacturing (up 13.1 percent), educational (up 5.8 percent), and transportation (up 4.4 percent) sectors. For the month of January, the largest gains were in the health care (up 2.9 percent), religious (up 1.7 percent), and communications (up 1.2 percent) sectors; whereas, the biggest declines were in the power (down 14.5 percent), lodging (down 6.1 percent), and amusement and recreation (down 4.5 percent) sectors.

Public sector nonresidential spending was mostly lower, with year-over-year activity down 2.7 percent. Nonetheless, there were some monthly increases in construction spending in January. These included higher spending in the power (up 9.0 percent), commercial (up 3.0 percent), and amusement and recreation (up 1.4 percent) segments.

Chad Moutray is chief economist, National Association of Manufacturers.


Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM) and the Director of the Center for Manufacturing Research for The Manufacturing Institute, where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

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