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ABC Reports: Nonresidential Construction Spending Flat in February

CEU2“Construction is impacted more by weather than just about any economic segment and the impact of February’s brutal weather is evident in the government’s spending figure.”—ABC Chief Economist Anirban Basu

Spending 4.1.15Blame it on the weather – that is what many economists have been doing over the past two months as economic data continue to disappoint. Retail sales, durable goods orders and other categories have not been as strong as anticipated.

Nonresidential construction has often proved an exception, with the industry’s momentum gaining steam recently. However, in February, nonresidential construction spending remained virtually unchanged inching down 0.1 percent on a monthly basis, according to the April 1 release from the U.S. Census Bureau. The February 2015 spending figure is 4.6 percent higher than February 2014, as spending for the month totaled $611.5 billion on a seasonally adjusted, annualized basis. The estimate for January spending was revised downward, from $614.1 billion to $611.9 billion, while the government revised December’s spending estimate upward from $627 billion to $629.3 billion.

“Construction is impacted more by weather than just about any economic segment and the impact of February’s brutal weather is evident in the government’s spending figure,” said Associated Builders and Contractors Chief Economist Anirban Basu. “ABC continues to forecast robust nonresidential construction spending recovery in 2015 despite the most recent monthly data, with the obvious exceptions of industry segments most directly and negatively impacted by declines in energy prices.

“The broader U.S. economy has not gotten off to as good a start in 2015 as many had expected with consumer spending growth frustrated by thriftier than anticipated shoppers,” said Basu. “With winter behind us and temperatures warming, the expectation is that economic growth will roar back during the second quarter, which is precisely what happened last year. To the extent that this proves to be true, nonresidential construction’s recovery can be expected to persist.”

Seven of 16 nonresidential construction subsectors posted increases in spending in February on a monthly basis.

  • Manufacturing-related spending expanded 6.8 percent in February and is up 37.9 percent on a year-over-year basis.
  • Conservation and development-related construction spending expanded 11 percent for the month and is up 19.8 percent on a yearly basis.
  • Office-related construction spending expanded 2.4 percent in February and is up 19 percent from the same time one year ago.
  • Amusement and recreation-related construction spending gained 2 percent on a monthly basis and is up 22.5 percent from the same time last year.
  • Education-related construction spending grew 0.3 percent for the month, but is down 0.6 percent on a year-over-year basis.
  • Construction spending in the transportation category grew 0.6 percent on a monthly basis and has expanded 9.3 percent on an annual basis.
  • Lodging-related construction spending was up 5 percent on a monthly basis and 10.4 percent on a year-over-year basis.

Spending in nine nonresidential construction subsectors failed to rise in February.

  • Health care-related construction spending fell 0.9 percent for the month and is down 4.5 percent for the year.
  • Spending in the water supply category dropped 7.8 percent from January, but is still 7.4 percent higher than at the same time last year.
  • Public safety-related construction spending lost 2.2 percent on a monthly basis and is down 9.6 percent on a year-over-year basis.
  • Commercial construction spending lost 1.9 percent in February, but is up 13.5 percent on a year-over-year basis.
  • Religious spending fell 4.8 percent for the month and is down 10.3 percent from the same time last year.
  • Sewage and waste disposal-related construction spending shed 1.4 percent for the month, but has grown 19.9 percent on a 12-month basis.
  • Power-related construction spending fell 4.5 percent for the month and is 17.2 percent lower than at the same time one year ago.
  • Lodging construction spending is down 4.4 percent on a monthly basis, but is up 18.2 percent on a year-over-year basis.
  • Sewage and waste disposal-related construction spending shed 7.5 percent for the month, but has grown 16 percent on a 12-month basis.
  • Power-related construction spending fell 1.1 percent for the month and is 13.2 percent lower than at the same time one year ago.
  • Communication-related construction spending fell 6.1 percent for the month and is down 15.5 percent for the year.
  • Highway and street-related construction spending was unchanged in February and is up 3.3 percent compared to the same time last year.

To view the previous spending report, click here.

Sikich 2015 Construction Outlook – Steady Growth Expected Across Multiple Sectors Despite Skilled Labor Shortage

Sikich 2015 Sikich 2015 2 Sikich 2015 3

ABC Reports: Nonresidential Construction Spending Slips for Second Consecutive Month

CEU2“September’s drop in nonresidential construction spending is disappointing given the growing momentum in the broader economy and the generally positive signals being sent by industry-specific leading economic indicators.”—ABC Chief Economist Anirban Basu.

Construction Spending Nov 2014Nonresidential construction spending slipped 1 percent in September but has still managed to expand 4.2 percent on a year-over-year basis, according to the Nov. 1 release from the U.S. Census Bureau. Spending for the month totaled $596.1 billion on a seasonally adjusted, annualized basis while the government slightly revised the August spending figure from $603.7 billion to $601.9 billion.

“September’s drop in nonresidential construction spending is disappointing given the growing momentum in the broader economy and the generally positive signals being sent by industry-specific leading economic indicators,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Based on a combination of these leading indicators—including ABC’s own Construction Backlog Indicator and the Architecture Billings Index—and the anticipated performance of the U.S. economy, nonresidential construction spending should re-establish an upward trajectory on a seasonally adjusted basis going forward.

“With national job creation accelerating recently and interest rates remaining ultra low, one would expect private construction to perform well during the quarters ahead, while growth in publicly funded spending will be much softer,” said Basu. “The industry should be further buoyed by the economy’s two consecutive quarters of respectable economic growth, something the U.S. economy has rarely achieved during the current recovery.”

Only five of 16 nonresidential construction subsectors posted increases in spending in September on a monthly basis.

  • Office-related construction spending grew 2.4 percent in September and is up 15.7 percent from the same time one year ago.
  • Lodging construction spending is up 4.7 percent on a monthly basis and is up 14.7 percent on a year-over-year basis.
  • Conservation and development-related construction spending grew 4.1 percent for the month and is up 31.7 percent on a yearly basis.
  • Commercial construction spending gained 1.3 percent for the month and has grown 12.3 percent on a year-over-year basis.
  • Spending in the water supply category expanded 1.1 percent on a monthly basis, but is down 1.6 percent for the year.

Spending in 11 nonresidential construction subsectors declined in September.

  • Amusement and recreation-related construction spending lost 0.8 percent in September, but is up 0.6 percent from the same time last year.
  • Manufacturing-related spending fell 1.3 percent on a monthly basis, but is up 16.4 percent on a year-over-year basis.
  • Communication construction spending declined 0.7 percent for the month and is down 12.8 percent from the same time last year.
  • Religious spending fell 3.1 percent for the month, but is up 2.6 percent from the same time last year.
  • Sewage and waste disposal-related construction spending declined 2.4 percent for the month, but has expanded 1.1 percent on a 12-month basis.
  • Health care-related construction spending fell 0.9 percent for the month and is down 7.5 percent on a yearly basis.
  • Education-related construction spending fell 0.1 percent for the month, but is up 7.1 percent on a year-over-year basis.
  • Construction spending in the transportation category fell 1.1 percent on a monthly basis, but has expanded by 1.2 percent on an annual basis.
  • Highway and street-related construction spending fell 3.6 percent in September and is down 1.7 percent compared to the same time last year.
  • Public safety-related construction spending lost 2.3 percent on a monthly basis and is down 11.1 percent on a year-over-year basis.
  • Power construction spending fell 3.1 percent for the month, but is 2 percent higher than at the same time one year ago.

To view the previous spending report, click here.

ABC Reports: Nonresidential Construction Spending Rebounds in July

CEU2 “Today’s encouraging report provides further evidence that a vigorous nonresidential construction recovery is finally at hand.”—ABC Chief Economist Anirban Basu.

Construction Spending_9 2Nonresidential construction spending expanded strongly in July, growing 2.5 percent on a monthly basis and rising a robust 8.6 percent on a year-over-year basis according to a Sept. 2 release from the U.S. Census Bureau. Spending for the month totaled $617.8 billion on a seasonally adjusted, annualized basis. The government also revised upward a somewhat disappointing June nonresidential construction spending estimate from $589 billion to $603 billion and the estimate for May from $606 billion to $611 billion.

“Today’s encouraging report provides further evidence that a vigorous nonresidential construction recovery is finally at hand,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Increased job growth, booming energy production, expanding industrial production and normalizing capital markets are all contributing to nonresidential construction’s renewed momentum and confidence among developers and other significant consumers of construction services is high, signaling ongoing recovery.

“The economy is recovering rapidly enough to improve real estate conditions in meaningful ways without triggering a shift in the Federal Reserve’s still accommodative policy making,” said Basu. “Both stock and bond markets have been rallying of late, which has helped to generate wealth and lower borrowing costs simultaneously, an ideal situation for construction. Progress has been particularly apparent in power and industrial segments, with year-over-year construction spending up 26 percent in the power category and 24 percent in manufacturing.”

Spending increased on a monthly basis in 11 of 16 nonresidential construction subsectors in July.

  • Office-related construction spending grew by 0.1 percent in July and is up 20 percent from the same time one year ago.
  • Health care-related construction spending grew 1.6 percent for the month, but is down 6.0 percent from the same time last year.
  • Manufacturing related spending grew 4.7 percent on a monthly basis and is up 23.9 percent on an annual basis.
  • Education-related construction spending grew 0.5 percent for the month but is down 1.2 percent on a year-over-year basis.
  • Lodging construction spending is up 2.7 percent on a monthly basis and is up 16.0 percent on a year-over-year basis.
  • Spending in the water supply category expanded 2 percent from June, but is 2.8 percent lower than at the same time last year.
  • Construction spending in the transportation category grew 0.4 percent on a monthly basis and has expanded by 2.2 percent on an annual basis.
  • Amusement and recreation-related construction spending grew 0.2 percent on a monthly basis and is up 12 percent from the same time last year.
  • Highway and street-related construction spending expanded 6.9 percent in July and is up 2.7 percent compared to the same time last year.
  • Public safety-related construction spending gained 3.3 percent on a monthly basis and is up 9.6 percent on a year-over-year basis.
  • Power construction spending gained 7.2 percent for the month and is 25.7 percent higher than at the same time one year ago.

Spending in five nonresidential construction subsectors declined in July.

  • Commercial construction spending fell 2.8 percent in July, but is up 6.9 percent on a year-over-year basis.
  • Communication construction spending fell 1.2 percent for the month and is down 11.3 percent on an annual basis.
  • Religious spending fell 5.1 percent for the month and is down 1.3 percent from the same time last year.
  • Sewage and waste disposal-related construction spending fell 1.4 percent for the month, but has grown 3.1 percent on a 12-month basis.
  • Conservation and development-related construction spending fell 7.1 percent for the month, but is up 24.8 percent on a yearly basis.

To view the previous spending report, click here.

Holt Cat® Invests In Dubiski High School’s Technical Skills Program

HOLT CAT and Caterpillar®, as part of the Dealer Excellence Fund, have made an investment of $8,800 to Dubiski Career High School in Grand Prairie to support its technical skills program and the career development of technical students. This morning, Dallas WFAA’s Daybreak program featured HOLT CAT Regional Service Manager Tony Spalding presenting the check to Grand Prarie Superintendent Dr. Susan Hull, and Jose Sanchez, a high school senior in the Diesel Technician Training Program at Dubiski High School. Sanchez plans to get training to re-build diesel engines after completing high school. A number of Grand Prarie Independent School District Representatives and Dubiski High School students were in attendance.

HOLT’s Tony Spalding presenting the donation check to a number of Dubiski High School Students

The Caterpillar Dealer Excellence Fund (Est. 1989) is a program to strengthen curriculum and faculty development in technical schools and increase the pool of qualified service technicians.

“The goal of the Dealer Excellence Fund Program is to help schools develop state-of-the-art technical training programs,” explains Shaun Manning, Technical Training Director, HOLT CAT Pro Tech! “When a Cat dealer supports a school’s technical skills program by making a donation, the foundation matches it.” Therefore, the Caterpillar Foundation matched HOLT’s original donation of $4,400 to produce a combined donation of $8,800.

Dubiski High School seniors and juniors in the Ag Power Systems Program with teacher Rick Elmore and HOLT’s Tony Spalding (left)

Rick Elmore, Automotive Program Facilitator and Instructor at Dubiski Career High School, detailed how the school plans to use this donation. “The funds will be used for a hydraulic training system for the diesel mechanic program, which will help prepare students for entry-level positions in the heavy-duty equipment repair field. Hydraulic systems are extremely important and an integral component of construction/agricultural equipment.”

In addition to the investment, HOLT CAT is currently interviewing Dubiski High School students for paid internship positions.  The programs begins in December and eligible student interns will receive top level industry training and could qualify for the National Safe Tractor Operator Certification, which will help these young people develop a competitive edge in the market place.

HOLT strongly supports the training and education of technical students and hopes to increase the pool of qualified technicians to meet industry needs for these specialized employees. The donated funds may be used for scholarships, faculty development, training aids and equipment. Dubiski Career High School was evaluated and selected based on the strength of their current infrastructure and program.