Bad Winter Weather Halts Nonresidential Construction Recovery

Associated Builders & Contractors Inc.
March 10, 2014

Nonresidential construction spending declined for the second consecutive month, falling 0.3 percent in January, but is up 6.5 percent over the past year, according to U.S. Census Bureau results, as reported by the Associated Builders & Contractors Inc. Spending in 11 nonresidential construction subsectors decreased in January. Commercial construction spending fell 2.5 percent in January, but increased 12.4 percent on a year-over-year basis. Healthcare-related construction spending fell 1.2 percent for the month and 4.5 percent for the year.

“Wicked weather has produced a temporary halt to the nation’s nonresidential construction recovery,” said Anirban Basu, Associated Builders and Contractors chief economist, in a release. “Based on backlog and other leading indicators, 2014 should have gotten off to a decent start; however, the cold and dislocating weather has now persisted into March, strongly suggesting that the first quarter of 2014 will not end up being a period of progress for the nation’s nonresidential construction segments."

Even with the particularly inclement weather this year, January declines in nonresidential construction spending are not unusual. Basu noted that during six of the past seven Januarys, nonresidential construction spending has fallen. He concludes that the weak start for 2014 should not be indicative of performance in the spring.