Nonresidential fixed investment fell by 0.6% during the second quarter after expanding by 1.6% during the first quarter, according to the July 30 real gross domestic product (GDP) report by the Bureau of Economic Analysis (BEA).
For the economy as a whole, real GDP expanded by 2.3% (seasonally adjusted annual rate) during the second quarter following a 0.6% increase during the year's first quarter. Note that the first quarter estimate for nonresidential fixed investment was revised upward from -3.4% annualized growth.
"In the first half of 2015, both the broader economy and nonresidential investment lost the momentum they had coming into the year," said Associated Builders and Contractors Chief Economist Anirban Basu. "Rather than indicating renewed progress in terms of achieving a more robust recovery, today's GDP release indicates that a variety of factors helped to stall investment in nonresidential structures. There are many viable explanations, including a weaker overall U.S. economy, a stronger U.S. dollar, decreased investment in structures related to the nation's energy sector, soft public spending, and uncertainty regarding monetary policy and other abstracts of public policy. While the expectation is that the second half of the year will be better, unfortunately not much momentum is being delivered by the year's initial six months.
"Perhaps the most salient facet of this GDP release was the revisions," said Basu. "The BEA revised the first quarter estimate upward from -0.2% to 0.6% annualized growth. This is not surprising; many economists insisted that the economy did not shrink in the first quarter. However, the BEA also downwardly revised growth figures from the fourth quarter of 2011 to the fourth quarter of 2014. Over that period, GDP increased at an average annual rate of 2.1%, 0.3 percentage points lower than previously thought. These revisions could be a function of the agency's ongoing effort to tackle residual seasonality, a pattern in which seasonal adjustments led to repeated first quarter slowdowns. It will take a few more quarters to understand the full impact of the improved seasonal adjustments."
Performance of key segments during the first quarter:
- Investment in nonresidential structures decreased at a 1.6% rate after decreasing at a 7.4% rate in the first quarter.
- Personal consumption expenditures added 1.99% to GDP after contributing 1.19% in the first quarter.
- Spending on goods grew 1.1% from the first quarter.
- Real final sales of domestically produced output – minus changes in private inventories – increased 2.5% for the second quarter after a 2.5% increase in the first quarter.
- Federal government spending decreased 1.1% in the second quarter after increasing by 1.1% in the first quarter.
- Nondefense spending decreased 0.5% after expanding by 1.2% in the previous quarter.
- National defense spending fell 1.5% after growing 1% in the first quarter.
- State and local government spending grew 2% during the second quarter after a decrease of 0.8% in the first.
To view the previous GDP report, click here.
Related Stories
Museums | Feb 9, 2015
Herzog & de Meuron's M+ museum begins construction in Hong Kong
When completed, M+ will be one of the first buildings in the Foster + Partners-planned West Kowloon Cultural District.
Multifamily Housing | Feb 9, 2015
GSEs and their lenders were active on the multifamily front in 2014
Fannie Mae and Freddie Mac securitized more than $57 billion for 850,000-plus units.
Contractors | Feb 9, 2015
Construction firms reach highest employment total since February 2009
Construction employers added 39,000 jobs in January and 308,000 over the past year, reaching the highest employment total since February 2009.
BIM and Information Technology | Feb 8, 2015
BIM for safety: How to use BIM/VDC tools to prevent injuries on the job site
Gilbane, Southland Industries, Tocci, and Turner are among the firms to incorporate advanced 4D BIM safety assessment and planning on projects.
Museums | Feb 6, 2015
Tacoma Art Museum's new wing features sun screens that operate like railroad box car doors
The 16-foot-tall screens, operated by a hand wheel, roll like box car doors across the façade and interlace with a set of fixed screens.
Cultural Facilities | Feb 6, 2015
Architects look to ‘activate’ vacant block in San Diego with shipping container-based park
A team of alumni from the NewSchool of Architecture and Design in San Diego has taken over a 28,500-sf empty city block in that metro to create what they hope will be a revenue-generating urban park.
Multifamily Housing | Feb 6, 2015
Fannie Mae to offer lower interest rates to LEED-certified multifamily properties
For certified properties, Fannie Mae is now granting a 10 basis point reduction in the interest rate of a multifamily refinance, acquisition, or supplemental mortgage loan.
Codes and Standards | Feb 6, 2015
Obama executive order requires federal construction projects to consider flood damage caused by climate change
To meet the new standard, builders must build two feet above the currently projected elevation for 100-year floods for most projects.
HVAC | Feb 6, 2015
ASHRAE, REHVA publish guide to chilled beam systems
The guide provides tools and advice for designing, commissioning, and operating chilled-beam systems.
Contractors | Feb 6, 2015
Census Bureau: Capital spending by U.S. businesses increased 4.5%
Of the 19 industry sectors covered in the report, only one had a statistically significant year-to-year decrease in capital spending: the utilities sector.
