August marked the seventh consecutive month nonresidential construction spending expanded according to an Oct. 1 release supplied by the U.S. Census Bureau. Nonresidential spending totaled $696.3 billion on a seasonally adjusted, annualized basis in August, a 0.3 percent increase from the previous month and a 12.3 percent increase from the same time last year. The Census Bureau downwardly revised July's estimate from $696.1 billion to $694.1 billion.
"Job growth is fueling both consumer spending and the absorption of space, all of this is good for construction spending," said Associated Builders and Contractors Chief Economist Anirban Basu. "While construction spending has expanded by more than 12 percent over the past year, that is not to suggest that macroeconomic risks do not abound. Interest rates are likely to head higher going forward and there is no guarantee that energy prices will remain subdued. While low energy prices have caused some regional economies to slow, investment and spending has been bolstered in others.
"Recently, much attention has been focused on the global economic slowdown and the volatility of financial markets," said Basu. "The Federal Reserve's recent decision not to increase interest rates supported a developing narrative which suggests that the weakness now apparent in much of the world will eventually bring the U.S. into another recession."
Eight of 16 nonresidential construction sectors experienced spending increases in August on a monthly basis:
- Lodging-related construction spending expanded 2.8 percent on a monthly basis and 41.4 percent on a year–over-year basis
- Health care-related construction spending grew 1.9 percent on a monthly basis and 9.1 percent on a yearly basis
- Public safety-related construction spending expanded 0.4 percent in August and is 0.2 percent higher than last year
- Spending in the amusement and recreation category grew 1.3 percent for the month and 34.7 percent from the same time last year
- Transportation-related construction spending grew 1.4 percent in August and is up 12.1 percent from the same time last year
- Communication-related construction spending is up 0.4 percent for the month and 11.5 percent on a yearly basis
- Power-related construction spending expanded 1.2 percent month-over month but is down 6.7 percent year-over-year
- Manufacturing-related construction spending expanded 1.3 percent on a monthly basis and 57.6 percent on a yearly basis
Spending in half of the nonresidential construction subsectors fell in August on a monthly basis:
- Highway and street-related construction spending fell by 0.6 percent in August but is up 7 percent from the same time last year
- Sewage and waste disposal-related construction spending is 0.3 percent lower from July 2015 but 9 percent higher than in August 2014
- Water supply-related construction spending is down 0.2 percent for the month but is up 4.9 percent over the past 12 months
- Conservation and development-related construction spending fell 0.9 percent for the month but is up 12.7 percent from the same time last year
- Office-related construction spending dipped 0.2 percent lower in August but is up 25.4 percent since the same time last year
- Spending in the commercial category fell 1.2 percent for the month but grew 1.3 percent over the past 12 months
- Educational-related construction spending inched 0.6 percent lower for the month but is up 5.0 percent year-over-year
- Religious-related construction spending fell 9.4 percent for the month and 4.6 percent from August 2014