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Economy in Brief

U.S. Construction Spending Rose Slightly
by Tom Moeller January 2, 2008

The value of construction put in lace rose a slight 0.1% during November following a 0.4% downtick during October. These, and other, small monthly changes this year have left the value of construction put in place down just 0.2% year to date.

Gains in nonresidential building activity have cushioned weakness in the residential area. Nonresidential building activity rose 2.1% in November and that pulled the year to date gain to 16.1%. Year to date, building in the lodging area is up a whopping 71.4%. Office construction is up 17.1% and commercial building rose 8.8%.

Residential building in November fell another 2.5% m/m and year to date activity is off 16.5%. Building of new single family units fell 5.0% during November. Year to date the decline totals 26.7%. Again to the upside was spending on improvements. It rose 0.7% in November and increased 3.9% ytd.

During the last twenty years there has been an 84% correlation between the q/q change in the value of residential building and its contribution to growth in real GDP.

Public construction spending also has been strong this year and rose 2.5% during November. That pulled to ytd gain to 12.5%. Construction on highways & streets rose 1.9%, 12.8% ytd. The value of construction on highways & streets is nearly one third of the value of total public construction spending. Construction spending on education also has been fir m and up 11.1% this year.

These more detailed categories represent the Census Bureau’s reclassification of construction activity into end-use groups. Finer detail is available for many of the categories; for instance, commercial construction is shown for Automotive sales and parking facilities, drugstores, building supply stores, and both commercial warehouses and mini-storage facilities. Note that start dates vary for some seasonally adjusted line items in 2000 and 2002 and that constant-dollar data are no longer computed.

  November October Y/Y 2006 2005 2004
Total 0.1% -0.4% -0.1% 5.6% 10.7% 11.0%
Private -0.7% -0.9% -4.8% 4.7% 12.0% 13.8%
  Residential -2.5% -2.3% -17.8% 0.5% 13.7% 18.7%
  Nonresidential 1.7% 1.2% 19.5% 15.2% 7.8% 3.8%
Public 2.5% 0.9% 16.2% 9.2% 6.2% 1.7%
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