March 26, 2014

Nonresidential Construction Remains Sporadic, Reports Marcum LLP

Nonresidential Construction Remains Sporadic, Reports Marcum LLP

New York City, NY – The Marcum Commercial Construction Index for the fourth quarter of 2013 today rounded out the year by reporting that economic recovery in the nonresidential construction sector remains sporadic, despite encouraging momentum in the general economy. The index is compiled by the Construction Services Practice of Marcum LLP, a top national accounting and advisory firm.

“In December, nonresidential construction spending fell 1.3 percent on a monthly basis following a 0.6 percent increase in November and 1.6 percent increase in October,” wrote Marcum’s Chief Construction Economist, Anirban Basu. “Spending fell in both the private and public sectors in December. Total private nonresidential construction spending fell 0.7 percent and public nonresidential construction spending fell by 2.1 percent. Weather played a role, though does not necessarily represent a complete explanation.”

The negative overall spending trend in December had a few pockets of positivity, carrying over the better performance of the quarter’s first two months. As 2013 wound down, spending gains were seen in four of the 16 nonresidential construction subsectors — Power, Conservation & Development, Highway & Street, and Transportation – with all but Power registering year-over-year growth. While the month ended with spending declines in the remaining 12 subsectors, several ended up in positive positions compared to a year earlier. These included Lodging, Office, Commercial, and Amusement & Recreation.

The quarter ended with good news in hiring trends, as 15 of the largest 20 U.S. metropolitan areas showed year-over-year construction employment gains in December. The largest employment growth was seen in Tampa (+10.6%), San Diego (+10.1%), Atlanta (+9.6%), Los Angeles (+7.9%) and Minneapolis (+7.7%). The biggest monthly losses in construction employment were seen in Seattle (-2.5%) and Miami (-1%).

“December’s uninspiring performance should not alter what remains a relatively positive forecast for 2014’s nonresidential construction industry. Construction’s leading indicators have largely turned positive. Average backlog has been on the upswing, and architectural billings have edged higher month-to-month,” Mr. Basu said.

“With all of the signs pointing to 2014 as a year of real recovery, now is the time for contractors to pay close attention to their access to capital,” said Joseph Natarelli, Marcum’s Construction Industry Leader and Partner-in-Charge of the Firm’s New Haven office. “No one wants the stresses of winning new work only to find that they can’t afford to perform it. It is critical for contractors to keep an eye on the health and condition of their balance sheets, talk with their sureties and bankers, and stay close with their professional services advisors to make sure they are best positioned to benefit as the recovery continues to gain momentum.”

Marcum LLP’s Construction Services Group provides strategic and timely accounting, audit, and consulting and taxation services to construction clients ranging from start-ups to multi-billion-dollar enterprises. The firm’s technical experts serve on many industry boards and committees and regularly contribute to construction conferences and publications.

About Marcum LLP
Marcum LLP is a top-ranked national accounting and advisory firm dedicated to helping entrepreneurial, middle-market companies and high net worth individuals achieve their goals. Marcum’s industry-focused practices offer deep insight and specialized services to privately held and publicly registered companies, and nonprofit and social sector organizations. The Firm also provides a full complement of technology, wealth management, and executive search and staffing services. Headquartered in New York City, Marcum has offices in major business markets across the U.S. and select international locations. #AskMarcum.

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