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Economy in Brief

U.S. Construction Spending Up Slightly in November
by Tom Moeller January 7, 2008

The value of construction put in place rose slightly in November by 0.1%. That followed a 0.4% October decline which was softer than the 0.8% drop reported initially. The revision was due to a rise in nonresidential building instead of the decline indicated last month. The three month growth in total construction activity remained at a stable at -0.1% (AR), an improvement from the 2.3% rate of decline last Autumn.

In November, residential building continued lower. The 2.4% m/m decline was the largest of the current down cycle and it dropped the three month change to -24.4% (AR). Building of new single family units fell 5.0% m/m (-41.2%, three month, AR) and spending on improvements gained 0.7% (6.7%, three month, AR).

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.

Nonresidential building continued strong and produced a 1.7% rise after a increase 1.2% during the month prior. Three month growth remained quite firm at 24.4% (AR) due to a 37.2% three month rise in office construction and a 21.7% rise in multi-retail building. Commercial construction got back in the upside act with a 12.1% three month gain and educational facility building rose 34.2%.

A 2.5% November rise in public construction spending raised the three month growth rate to 22.2%. Construction on highways & streets rose 32.1% (AR) on a three month basis. The value of construction on highways & streets is nearly one third of the value of total public construction spending. Construction spending on educational facilities again was strong with a 19.1% three month rise.

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.

Recent and Prospective Developments in Monetary Policy Transparency and Communications: A Global Perspective is today's speech by Fed Vice ChairmanDonald L. Kohn at the National Association for Business Economics Annual Meeting in New Orleans, Louisiana and is available here.

  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 -2.4% -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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