2001 Nonresidential Construction Spending

August Deep Links: Expanding on CSE's coverage of the market facing engineering firms, here is further analysis of the economic trends affecting nonresidential construction spending.


by Daryl Delano, Cahners Economics

The nonresidential building sector of construction, encompassing the broad swath of commercial, institutional and industrial work, continued to post surprisingly strong numbers through the first third of this year. After recording a gain of 11.1% last year, nonresidential construction spending through the first four months of this year was running 9.2% ahead of the total for the first-third of 2000. Total nonresidential construction spending during the month of April 2001 was a solid 9.6% higher than during the same month of 2000. The commercial sector was up 7.2%, the institutional sector by 9.2% and spending in the industrial sector was 19.0% greater this April than during April of 2000.

Despite the fast start, though, Cahners Economics is forecasting slower growth in nonresidential markets both this year and 2002. But the downturn should be much shallower than during the severe


Total spending for the new construction and renovation/remodeling of commercial buildings was estimated at $43.2 billion during January-April 2001, an increase of 7.3% from the value of commercial work completed over the first-third of 2000. April 2001 spending for new office construction was 11.7% greater than during the same month of 2000, and retail building construction was up 7.7% over the year, but spending for new hotels/motels came in more than 9% below its year-ago level.

The office sub-sector continues to lead the way with double-digit growth, up 16.1% between 1999 and 2000, and recording growth of exactly the same 16.1% rate through the first four months of 2001. However, spending declined by 2.5% between March and April the first evidence that service-sector layoffs and rising office vacancy rates are starting to put a dent in office construction activity.

Retail construction activity, on the other hand, was essentially unchanged over the most recent two months for which construction spending data is available. Through the first four months of 2001, the value of retail building construction completed was estimated to be worth 4.3% more than during the first-third of last year.

The hotel/motel sub-sector has been the only laggard in the commercial construction market during the past two years. After growth of a tepid 1.7% between 1999 and 2000, spending on lodging facility construction totaled 8.9% less through April 2001 than over the first four months of 2000.


Spending for public and private institutional buildings totaled an estimated $42.2 billion between January and April of this year, up about 7% from the sub-sector's total for the first-third of 2000. After sub-par growth of only about 5% during 1999, spending on institutional buildings rose by a steep 11.3% in 2000.

Although growth in religious buildings construction was increasing at just a 1.2% annualized rate through the first four months of 2001, down sharply from the gains of 5.4% recorded last year and 13.7% registered during 1999, privately-funded construction of educational buildings and hospitals/health facilities was expanding at about a 10% rate.

Publicly-funded projects typically make up about 65% of the institutional sector total. The relatively small category of publicly-funded health facilities (totaling about $4.2 billion worth of work last year) was the only institutional category to show an over-the-year loss (-2.6%) through the first-third of 2001. Construction work on public educational buildings posted a very strong 10.5% over-the-year gain through April, and spending for all other public buildings (excluding the health sub-sector) was 5.6% greater through the first four months of this year as compared to the same period in 2000.

Prior to 1998, hospitals and other health facility construction had grown for six consecutive years. But then the combination of an accelerated pace of consolidation in the industry and general health-system-wide cost containment initiatives led to small declines in health-care construction spending over the final two years of the 1990s. Growth returned in a big way last year. After falling by 0.6% between 1998 and 1999, overall (privately- and publicly-funded) health-care construction spending soared to 11.2% during 2000. And through the first-third of this year, overall health sector (private and public combined) construction spending had continued to grow at a healthy 7.4% annualized rate.

Spending for the construction of new educational buildings, and for the expansion or renovation of existing structures, continues to grow at an extremely healthy pace, year-in and year-out. During 2000, overall educational construction spending increased at an extraordinary 17.6% annual rate, better than twice the 7.8% increase recorded between 1998 and 1999.


Although there are few who would dispute the conclusion that the nation's manufacturing sector has been in a recession for the better part of a year now, trends in industrial construction spending have remained defiantly healthy.

After growing by 15.9% between 1999 and 2000, business spending for new construction or retrofit of industrial plants and warehouses moved 22.4% ahead of its year-earlier pace through the first four months of 2001.

No comments
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
The System Integrator Giants program lists the top 100 system integrators among companies listed in CFE Media's Global System Integrator Database.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
This eGuide illustrates solutions, applications and benefits of machine vision systems.
Learn how to increase device reliability in harsh environments and decrease unplanned system downtime.
This eGuide contains a series of articles and videos that considers theoretical and practical; immediate needs and a look into the future.
Choosing controllers: PLCs, PACs, IPCs, DCS? What's best for your application?; Wireless trends; Design, integration; Manufacturing Day; Product Exclusive
Variable speed drives: Smooth, efficient, electrically quite motion control; Process control upgrades; Mobile intelligence; Product finalists: Vote now; Product Exclusives
Machine design tips: Pneumatic or electric; Software upgrades; Ethernet advantages; Additive manufacturing; Engineering Leaders; Product exclusives: PLC, HMI, IO
This article collection contains the 5 most referenced articles on improving the use of PID.
Learn how Industry 4.0 adds supply chain efficiency, optimizes pricing, improves quality, and more.

Find and connect with the most suitable service provider for your unique application. Start searching the Global System Integrator Database Now!

Cyber security cost-efficient for industrial control systems; Extracting full value from operational data; Managing cyber security risks
Drilling for Big Data: Managing the flow of information; Big data drilldown series: Challenge and opportunity; OT to IT: Creating a circle of improvement; Industry loses best workers, again
Pipeline vulnerabilities? Securing hydrocarbon transit; Predictive analytics hit the mainstream; Dirty pipelines decrease flow, production—pig your line; Ensuring pipeline physical and cyber security