Fixed investment in non-residential structures posts slight increase in the second quarter
Despite the nation’s sluggish economy, non-residential fixed investment jumped 17% in the second quarter, following a revised 7.8% increase in the first quarter, according to the U.S. Commerce Department’s latest gross domestic product (GDP) report, which came out in late July. Fixed investment in non-residential structures increased 5.2% in the second quarter, following seven straight quarters of losses, while fixed investment in non-residential equipment and software spiked up 21.9%, following a 20.4% increase in the first quarter of the year.
Gross domestic purchases continue to increase, up 5.1% in the second quarter. Overall, real GDP, meaning the output of goods and services produced by labor and property located in the United States, grew 2.4% in the second quarter, following a revised 3.7% increase in the first quarter and 5% increase in the fourth quarter of last year.
“On its face, today’s GDP report appears somewhat disappointing,” says Associated Builders and Contractors Chief Economist Anirban Basu. “Many economists had been predicting 3% growth or more for the second quarter. The immediate response of financial markets was somewhat negative to the news since it confirmed that the economy is hobbling into the third quarter.”
However, from a construction activity standpoint, Basu maintains this is good news — a reflection of both economic recovery and the impact of various stimulus programs. “The key issue is the extent to which the enhanced levels of construction data in the second quarter GDP report were merely a reflection of stimulus as opposed to sustainable recovery,” he says.