- Nonresidential construction spending expanded 2.5 percent on a monthly basis and 12.3 percent on a yearly basis
- The Census Bureau upwardly revised December's estimate from $681.2 billion to $684.5 billion
- For many months, the average contractor has been reporting decent backlog
WASHINGTON, D.C. — Nonresidential construction spending crested the $700 billion mark on a seasonally adjusted annualized basis in January for the first time since March 2009, according to analysis of U.S. Census Bureau data released today by Associated Builders and Contractors (ABC). Nonresidential construction spending expanded 2.5 percent on a monthly basis and 12.3 percent on a yearly basis, totaling $701.9 billion. The Census Bureau upwardly revised December's estimate from $681.2 billion to $684.5 billion, though they downgraded November's figure from $683.7 to $680.5 million. Private nonresidential construction spending increased by 1 percent for the month, while its public counterpart expanded by 4.6 percent.
"After several months of relatively weak nonresidential construction spending data, today's data release was most welcome," said ABC Chief Economist Anirban Basu. "While January is a difficult month to interpret and one that should not be overly emphasized, the fact of the matter is that the year-over-year performance in spending is consistent with a host of industry indicators. For many months, the average contractor has been reporting decent backlog. Measures of industry confidence have remained stable even in the face of adverse news coming from various parts of the world.
"While the nonresidential construction spending recovery appears to remain in place, the industry's overall outlook remains murky," said Basu. "The global economy remains weak, and domestic corporate profitability has been slipping. The U.S. economic recovery continues to be under-diversified, with consumers continuing to lead the way. If corporate profitability continues to struggle, given falling exports and a general lack of confidence among CEOs, the pace of employment growth will slow over the course of 2016. That will presumably affect consumer spending, which is already being hampered by rising health care costs. That, in turn, could jeopardize the ongoing economic recovery, now on its way to completing its seventh year."
Spending increased in January on a monthly basis in 10 of 16 nonresidential construction sectors.