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
| Aug 12, 2014
Vietnam's 'dragonfly in the sky' will be covered in trees, vegetation
Designed by Vietnamese design firm Vo Trong Nghia Architects, the building will be made up of stacked concrete blocks placed slightly askew to create a soft, organic form that the architects say is reminiscent of a dragonfly in the sky.
| Aug 12, 2014
Design firms invited to submit qualifications for St. Petersburg, Fla., waterfront project
The city of St. Petersburg, Fla., invites firms to submit their ideas for a new and improved pier for Florida's fifth largest city.
| Aug 11, 2014
Air Terminal Sector Giants: Morphing TSA procedures shape terminal design [2014 Giants 300 Report]
The recent evolution of airport terminals has been prompted largely by different patterns of passenger behavior in a post-9/11 world, according to BD+C's 2014 Giants 300 Report.
| Aug 11, 2014
Will Alsop's funky 'high-rise on stilts' will be built over an apartment building in London
South London's riverfront will soon be graced by one of Will Alsop's eccentric designs: a curved apartment tower on purple stilts.
| Aug 5, 2014
Shigeru Ban-designed Aspen Art Museum will open doors to public this week
After 18 month of planning and construction, the museum will open its new Shigeru Ban-designed facility to the public on August 9.
| Aug 5, 2014
Construction economists optimistic about 2014 growth
Anirban Basu, Kermit Baker and David Crowe provided a collaborative economic forecast combining their expert economic analysis on leading, present and lagging economic indicators.
| Jul 30, 2014
Nonresidential building activity on the rise for 2015: AIA Forecast
Semiannual Consensus Construction Forecast predicts 4.9% increase this year, 8% next year, with offices and retail facilities leading the charge.
| Jul 29, 2014
AECOM's buying spree continues: Deal to acquire Hunt Construction Group in the works
The acquisition comes just two weeks after AECOM's $6 billion deal to acquire rival engineering and construction company URS Corp.
| Jul 28, 2014
Reconstruction market benefits from improving economy, new technology [2014 Giants 300 Report]
Following years of fairly lackluster demand for commercial property remodeling, reconstruction revenue is improving, according to the 2014 Giants 300 report.
| Jul 28, 2014
Reconstruction Sector Construction Firms [2014 Giants 300 Report]
Structure Tone, Turner, and Gilbane top Building Design+Construction's 2014 ranking of the largest reconstruction contractor and construction management firms in the U.S.
