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Economy in Brief

U.S. Factory Inventories &Shipments Increase Again
by Tom Moeller January 4, 2010

Though its rate of decline has moderated, construction spending has continued to move lower. During November construction outlays fell 0.6% after a little-revised 0.5% October shortfall. The latest decline left the y/y change at -13.2% which was improved just modestly from the weakest -15.8% September comparison. The latest decline about matched Consensus estimates.

Residential building activity renewed its decline with a 1.6% fall following a 4.8% October gain. The decline owed to a 4.1% (-44.4% y/y) drop in multi-family building and a 3.9% (-2.8% y/y) shortfall in spending on improvements. Single-family construction rose 1.3% (-25.2% y/y) for the sixth consecutive monthly increase.

Nonresidential building activity was roughly unchanged after a steep 4.8% October decline. Since the 2008 peak, activity has fallen by 22.5%. Spending in the food & beverage industry declined 44.1% y/y while expenditures in the lodging were off by nearly one-half. Commercial building overall fell 40.5% y/y while office building dropped by more than one-third. Relatively moderate were the declines in the education (-18.8% y/y), religious (-18.3% y/y) and health care (-16.1% y/y) sectors. Factory sector spending (-7.0% y/y) was buoyed by gains in the chemical and in the computer/electronic/electrical sectors.

In the public sector, construction overall fell a modest 0.4% during November but y/y expenditures rose despite lower tax revenues. Building activity on highways & streets fell 2.9% m/m but rose 5.7% y/y due to the focus on infrastructure rebuilding. Public spending on health care facilities increased a strong 12.2% y/y but building in the education sector was off 2.6% y/y.

The construction put-in-place figures are available in Haver's USECON database.  

Construction (%) November October September Y/Y 2008 2007 2006
Total -0.6 -0.5 -1.6 -13.2 -6.9 -1.6 6.3
Private -0.7 -0.8 -2.4 -20.0 -11.1 -5.7 5.5
  Residential -1.6 4.8 -0.6 -19.2 -29.1 -19.7 1.0
  Nonresidential -0.0 -4.8 -3.7 -20.6 13.2 23.1 16.2
Public -0.4 0.0 -0.1 2.7 5.6 13.1 9.3
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