Nonresidential spending falters slightly to end 2016

Washington, D.C. — Nonresidential construction spending slipped 0.7 percent in the final month of 2016, but increased 4.6 percent over the previous year, according to analysis of U.S. Census Bureau data by Associated Builders and Contractors (ABC). Nonresidential spending decreased from $713.1 billion in November to $708.2 billion in December on a seasonally adjusted, annualized basis.

Both November’s estimate ($713.1 billion) and October’s estimate ($707.1 billion) were upwardly revised by less than one-tenth of a percent. Private nonresidential spending remained flat for the month, while public nonresidential spending contracted 1.7 percent.

“Private spending growth, which has led nonresidential spending growth for months, remained flat in December and, as a result, the preexisting story of the industry remains fundamentally unchanged,” said ABC Chief Economist Anirban Basu. “Public construction spending has been soft for many years and the December spending data merely served to extend that part of the tale. Spending in the sewage and waste disposal, transportation, and public safety sectors was particularly weak during the past 12 months. Private spending growth has been on-again, off-again for much of the year, so it is not a surprise that last month’s robust spending report was followed by a flat one.

“On the bright side, the architectural community became much busier in December, signaling an acceleration of commercial activity to come,” said Basu. “In addition, the new administration appears committed to fulfilling its campaign promises, including a pledge to step up infrastructure spending. This has asphalt, pavement and other infrastructure-intensive contractors expressing more confidence in their economic future than they have for many years. As such, the December data provide little insight into the future trajectory of nonresidential construction spending, which is set to improve markedly during the next six to 12 months.”