Nonresidential construction spending fell in September for the first time in eight months, the U.S. Census Bureau reported today, but the monthly drop in spending is not a cause for concern according to analysis by Associated Builders and Contractors (ABC). Nonresidential construction spending fell by 0.1 percent from August, totaling $692.8 billion on a seasonally adjusted annualized basis.

September’s year-over-year increase of 12.4 percent represents the largest increase since April 2008, although the Census Bureau did revise both July and August nonresidential spending estimates 0.4 percent lower. After falling in two consecutive months, public nonresidential construction spending grew by 0.7 percent in September while private sector construction spending fell by 0.7 percent for the month.

“The last several months have generally been associated with sizable increases in nonresidential construction,” said ABC Chief Economist Anirban Basu. “Today’s release, while not particularly upbeat, does not alter the fact that nonresidential construction spending continues to recover and that most contractors are busier than they were a year ago.

“Although there are many potential forces at work that resulted September’s monthly construction spending decline, most are not alarming. With construction materials prices falling, contractors may be able to offer somewhat lower prices for their services, helping to suppress growth in construction value put in place. It is also conceivable that some construction work is being slowed by an ongoing lack of available skilled personnel. This factor has certainly helped to slow residential construction, and it seems reasonable to presume that some nonresidential contractors would face similar issues.

“For now, the outlook appears positive,” said Basu. “Although the domestic economy only expanded by 1.5 percent during the third quarter, the weakness was largely the result of an adjustment to inventories and the impact of a weaker global economy. Domestic final demand continues to expand at a reasonable clip.”

Seven of 16 nonresidential construction sectors experienced spending increases in September on a monthly basis:

  • Educational-related spending expanded by 2 percent for the month and 11.5 percent for the year.
  • Spending in the religious category grew by 5.6 percent on a monthly basis and 0.8 percent year-over-year.
  • Amusement and transportation-related spending rose by 0.2 percent from August and 30.6 from September of last year.
  • Transportation-related spending expanded by 1.6 percent from a month ago and 10.2 percent from a year ago.
  • Highway and street-related construction spending inched 0.3 percent higher for the month and is up 10 percent from the same time last year.
  • Sewage and waste disposal-related spending rose by 1.1 percent from August and 12.9 percent from September of last year.
  • Spending in the water supply category gained 4.3 from the previous month and 5.6 on a year-ago basis.

Spending in nine of the nonresidential construction subsectors fell in September on a monthly basis:

  • Spending in the lodging category fell by 0.7 percent for the month but is up 32.8 percent from September 2014.
  • Office-related spending dipped 0.4 percent from August but is 19.3 percent higher than at the same time last year.
  • Spending in the commercial category fell by 1.1 percent on a monthly basis and by 2 percent on a yearly basis.
  • Health care-related spending inched 0.1 percent lower for the month but is up 9 percent on a year-ago basis.
  • Public safety-related spending fell 3 percent month-over-month and 4.8 percent year-over-year.
  • Spending in the communication-category declined 2.7 percent from August but is up 10.2 percent from the same time last year.
  • Power-related construction spending fell 1.7 percent on a monthly basis but expanded 1.9 percent over the previous 12 months.
  • Conservation and development-related spending lost 6 percent for the month but is still 1.6 percent higher than at the same time last year.
  • Manufacturing related spending fell 0.4 percent for the month but is still up 41.3 percent from September 2014.

View a table of all nonresidential construction sectors results.

To view the previous spending report, click