Investment in nonresidential structures dips

The Washington-based Associated Builders and Contractors (ABC) reports that investment in nonresidential structures has decreased at an annual rate of 15.3 percent in the third quarter of the year, according to an ABC analysis of data released by the U.S. Bureau of Economic Analysis.

ABC reports that the U.S. economy has expanded at a 2.6 percent annualized rate in the third quarter of the year, while investment in nonresidential structures is on a decline. ABC says investment in that sector has contracted in 10 of the past 12 quarters.

ABC Chief Economist Anirban Basu says that the U.S. Bureau of Economic Analysis’ latest data on gross domestic product could be considered “the calm before the storm.”

“Growth is likely to slow significantly going forward, but for now, the U.S. economy continues to expand as consumers keep spending on travel and goods, even in the face of significantly elevated inflation,” Basu says.

Basu adds that the major increase in borrowing costs this year “has yet to make its statistical mark on much of the economy,” but he says real nonresidential investment in structures posted its steepest contraction since the second quarter of 2020 and has now declined in all but two quarters since the start of the pandemic.

“For now, however, contractors remain somewhat upbeat about the outlook, and more than 47 percent of contractors expect their sales to rise over the next six months, according to ABC’s Construction Confidence Index,” he concludes.