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Nonresidential Fixed Investment Declines in the Third Quarter

Post Time:Nov 05,2012Classify:Industry NewsView:599

Nonresidential fixed investment fell 4.4 percent in the third quarter of this year, according to the U.S. Commerce Department's Gross Domestic Product (GDP) report. This quarter's decline precedes a 0.6 percent increase in the second quarter. As a whole, nonresidential fixed investment fell 1.3 percent in the third quarter after a revised 3.6 percent increase in the previous quarter. Nonresidential fixed investment in equipment and software remained static for the third quarter following a 4.8 percent increase in the second quarter. 

For the sixth straight quarter residential fixed investment increased. In the third quarter the sector recorded a 14.4 percent increase. Exports decreased 1.6 percent as exports of goods dipped 3.5 percent and exports of services increased 3.1 percent. Imports slipped 0.2 percent in the third quarter as imports of goods decreased 1.3 percent and imports of services increased 5.5 percent.

"Nearly every major aspect of the domestic economy expanded during the third quarter of the year," says Anirban Basu, chief economist Associated Builders and Contractors. "Unfortunately, that sector was nonresidential fixed investments, which overlaps substantially with nonresidential construction activity.

"Many economists attribute ongoing sluggish macroeconomic performance to a heightened level of uncertainty emerging from both foreign and domestic sources," says Basu. "However, certain segments of the economy are doing just fine, uncertainty notwithstanding.

"There is a consensus among economists that once the election is behind us-and if the nation resolves its fiscal cliff issues-economic activity will pick up due to improved confidence," says Basu. "This is possible, but those in nonresidential construction know construction spending often lags broader economic recovery by 12 to 18 months. The implication is that even under reasonably optimistic scenarios, nonresidential construction spending may not improve markedly for several quarters."

Source: www.usgnn.comAuthor: shangyi

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