Reed Construction Data Sees Improved 2012-13

Atlanta, GA, Dec. 2, 2011 -- Nonresidential building construction spending fell a slight 0.1% in September following a 1.3% increase in August, according to Reed Construction Data.

On a year-to-date basis, the measure was down 6.7% compared to the same period a year ago.

“For lease” private projects fell 0.8% following a 2.0% decline in August. There have now been three months of falling expenditures following four months of increases, Reed said.

Construction spending for institutional projects eked out a 0.1% increase following a 2.2% rise in August, leaving the measure at its highest level since September of last year.

Concern over the economic outlook is acting as a drag on nonresidential construction spending, Reed said.

With the economic outlook improving somewhat, spending totals will hold their own in the fourth quarter of this year and strengthen throughout 2012 and 2013, Reed predicted.

Construction activity in the near term will be limited to some extent by commercial developers who will slow construction on some projects already started and delay some projects scheduled to start because of dimmer prospects for profit when buildings are completed.

Offsetting this will be continued low long-term interest rates for those who can obtain funding.

"We expect continued evidence of economic strength to spur some additional spending by firms," Reed said.

"For 2011, nonresidential spending is projected to decline 4.5%. Improvement occurs in 2012 with 5.1% growth forecast and accelerating into 2013 with 8.3% growth."