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Nonresidential Spending Forecast to Rise 3.5 Percent in 201712-14-16 | Economic News

Nonresidential Spending Forecast to Rise 3.5 Percent in 2017

Associated Builders and Contractors Cites Growing Economy

The Associated Builders and Contractors said businesses will need to replace aging structures, and because of that, nonresidential construction spending is forecast to grow about 3.5 percent in 2017.

The U.S. economy continues to expand, and nonresidential construction spending should climb 3.5 percent in 2017, the Associated Builders and Contractors said.

"According to the Bureau of Economic Analysis, the average age of all fixed assets, including structures such as factories and hospitals, stands at 23 years – the oldest on record tracing back to 1925 – and there is a collective awareness among American enterprises that they will need to replace much of their capital stock in future years," said Anirban Basu, chief economist for the ABC. "In addition, rising energy prices could produce more investment and rising earnings – potentially translating into better support for asset prices, ongoing hiring and consumer spending."

Construction spending in the power subsector will lead all categories with a 6.1 percent increase in 2017, compared to 2016, followed by manufacturing at 6 percent, according to the ABC. The office subsector will expand 5.6 percent, followed by health care at 3.4 percent, and commercial at 3.2 percent.