Nonresidential construction still expanding

According to Patrick Newport, a U.S. Economist with Global Insight, commercial construction numbers continue to look good.


According to Patrick Newport, a U.S. Economist with Global Insight , commercial construction numbers continue to look good.

In summary:

* Construction spending fell 1.1% in March.
* A big drop in residential improvements (an unreliable estimate) distorted the top-line number.
Excluding improvements, spending fell 0.4%.
* Private construction declined 1.7%, while public construction increased 0.6%.
* Single-family home construction dropped by more than 5% for the fourth time in five months.
* Private nonresidential construction increased 1.9%. Moreover, its recent history was revised up.
* Based on these estimates, second quarter GDP will be revised up by $10.1 billion later this month.

For at least three reasons, this report was not as bad as the headline number implies.

First, residential improvements accounted for most of the drop. This category does not appear in the published tables because it does not meet the Census Bureau's quality standards. (One can back out an estimate of this volatile and unreliable category, however, by subtraction.) Indeed, March's improvements estimate, according to the Census documentation, is a forecast, not a data point based on sampled data. Excluding residential improvements, spending decreased 0.4%

Second, the condition of the nonresidential construction market is not as weak as portrayed in last month's release. Spending on nonresidential construction increased 1.9% in March. Moreover, the estimates for January and February were revised up. February's release implied that the nonresidential construction sector was slipping into recession. March's numbers indicate that it is expanding.

Third, the construction market is not as weak as portrayed in February's release, or as weak as the BEA portrayed it in the first quarter GDP estimates released yesterday (April 30). Based on March's construction numbers, second quarter GDP will be revised up by $10.1 billion later this month. This translates into nearly a 0.3% upward revision in real GDP.

No comments
Consulting-Specifying Engineer's Product of the Year (POY) contest is the premier award for new products in the HVAC, fire, electrical, and...
Consulting-Specifying Engineer magazine is dedicated to encouraging and recognizing the most talented young individuals...
The MEP Giants program lists the top mechanical, electrical, plumbing, and fire protection engineering firms in the United States.
Commissioning lighting control systems; 2016 Commissioning Giants; Design high-efficiency hot water systems for hospitals; Evaluating condensation and condensate
Solving HVAC challenges; Thermal comfort criteria; Liquid-immersion cooling; Specifying VRF systems; 2016 Product of the Year winners
MEP Giants; MEP Annual Report; Mergers and acquisitions; Passive, active fire protection; LED retrofits; HVAC energy efficiency
Driving motor efficiency; Preventing Arc Flash in mission critical facilities; Integrating alternative power and existing electrical systems
Putting COPS into context; Designing medium-voltage electrical systems; Planning and designing resilient, efficient data centers; The nine steps of designing generator fuel systems
Designing generator systems; Using online commissioning tools; Selective coordination best practices
As brand protection manager for Eaton’s Electrical Sector, Tom Grace oversees counterfeit awareness...
Amara Rozgus is chief editor and content manager of Consulting-Specifier Engineer magazine.
IEEE power industry experts bring their combined experience in the electrical power industry...
Michael Heinsdorf, P.E., LEED AP, CDT is an Engineering Specification Writer at ARCOM MasterSpec.
click me