The Marcum Commercial Construction Index highlights the continued spending weakness in nonresidential construction during the first nine months of the year and points to a significant anticipated change beginning in 2017. The change is being attributed to the major infrastructure-led stimulus package expected from the new Presidential administration. The national Construction Industry Practice group of Marcum LLP, a top national accounting and advisory firm, produces the quarterly index.
Overall nonresidential construction spending in September totaled $690.5 billion, down a slight 0.7 percent from a year earlier. Of the category’s 16 subsectors, bright spots included Office-related spending, which registered a whopping 23% gain to $70.7 billion; Lodging, up 20% year-over-year to $28.8 billion; Commercial construction, with a 6% gain to $71.7 billion; Amusement & Recreation, up 3.5% to $21.4 billion; and Educational construction, at $87.1 billion, a 3.3% percent increase.
The remaining 11 nonresidential subsectors all recorded fall-offs for the month, with the greatest declines in Sewage & Waste Disposal (-18.8%), Water Supply (-13.7%), Communication (-12.6%) and Transportation (-11.3%).
“Most construction firms report intense difficulty securing electricians, heating/cooling professionals, welders and carpenters, among others,” says Anirban Basu, Marcum’s Chief Construction Economist, in a press release. The construction worker unemployment rate in October was less than half of what it was five years ago, down to 5.7 % from 13.7 % in the same month of 2011. This compares to a national unemployment rate of 4.9% at the end of the 2016 third quarter.
Looking ahead, the Marcum report predicts that a stimulus package will put pressure on wages and inflation and lead to higher interest rates, which in turn will eventually hurt construction spending. “After a period of relatively intense construction spending due in part to a stimulus package, the nonresidential sector could face a sharp slowdown in construction spending thereafter,” it states.
For the complete Marcum Commercial Construction Index, visit www.marcumllp.com/industries/construction.
Related Stories
Market Data | Apr 3, 2017
Public nonresidential construction spending rebounds; overall spending unchanged in February
The segment totaled $701.9 billion on a seasonally adjusted annualized rate for the month, marking the seventh consecutive month in which nonresidential spending sat above the $700 billion threshold.
Market Data | Mar 29, 2017
Contractor confidence ends 2016 down but still in positive territory
Although all three diffusion indices in the survey fell by more than five points they remain well above the threshold of 50, which signals that construction activity will continue to be one of the few significant drivers of economic growth.
Market Data | Mar 24, 2017
These are the most and least innovative states for 2017
Connecticut, Virginia, and Maryland are all in the top 10 most innovative states, but none of them were able to claim the number one spot.
Market Data | Mar 22, 2017
After a strong year, construction industry anxious about Washington’s proposed policy shifts
Impacts on labor and materials costs at issue, according to latest JLL report.
Market Data | Mar 22, 2017
Architecture Billings Index rebounds into positive territory
Business conditions projected to solidify moving into the spring and summer.
Market Data | Mar 15, 2017
ABC's Construction Backlog Indicator fell to end 2016
Contractors in each segment surveyed all saw lower backlog during the fourth quarter, with firms in the heavy industrial segment experiencing the largest drop.
Market Data | Feb 28, 2017
Leopardo’s 2017 Construction Economics Report shows year-over-year construction spending increase of 4.2%
The pace of growth was slower than in 2015, however.
Market Data | Feb 23, 2017
Entering 2017, architecture billings slip modestly
Despite minor slowdown in overall billings, commercial/ industrial and institutional sectors post strongest gains in over 12 months.
Market Data | Feb 16, 2017
How does your hospital stack up? Grumman/Butkus Associates 2016 Hospital Benchmarking Survey
Report examines electricity, fossil fuel, water/sewer, and carbon footprint.
Market Data | Feb 1, 2017
Nonresidential spending falters slightly to end 2016
Nonresidential spending decreased from $713.1 billion in November to $708.2 billion in December.
