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Economy in Brief

U.S. Construction Activity Declines For Third Month
by Tom Moeller September 1, 2010

The news from the construction sector continues bleak. Overall, the value of construction-put-in-place fell 1.0% during July after earlier months' figures were revised sharply lower. The July decline was double the Consensus expectation. Monthly declines in private construction continued across-the-board though there has been some moderation in the rates of decline in recent months. Nevertheless, the level of overall July activity remained one-third below the 2006 peak.

Residential building activity fell a sharp 2.6% during July led by a 2.9% decline (+12.4% y/y) in spending on improvements. Single-family construction activity also fell a hard 2.5% (13.8% y/y) following the 1.1% June drop. Activity was off three-quarters from the late-2006 high. Multi-family building also dropped 1.5% (-51.6% y/y).

Nonresidential building activity posted a 0.8% monthly increase. Since the 2008 peak, activity has fallen by one-third but the latest increase was led by an 8.3% gain (-12.1% y/y) in power facilities and a 4.7% increase (-5.4% y/y) in communications. Spending on multi-retail commercial structures fell 2.1% (-23.0% y/y) while office building fell 3.3% (-40.0% y/y); more-than half below its early-2008 peak.. Health-care building also slipped 0.4% (-14.2% y/y) and spending on educational facilities fell 1.3% (-19.5% y/y).

Spending in the public sector also moved down 1.2% and was 7.9% below its peak 12-months ago. The latest decline reflected a 1.3% drop (-8.6% y/y) in nonresidential spending paced by a 2.9% drop (-7.0% y/y) in highways & streets which accounts for one-quarter of all public construction. Spending on health care rose 4.7% (-4.8% y/y) but transportation spending fell 3.8% (-1.4 y/y).

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

The minutes to the latest FOMC meeting are available here here.

Construction Put In Place (%) July June May Y/Y 2009 2008 2007
Total -1.0 -0.8 -2.8 -10.7 -14.9 -7.5 -1.4
Private -0.8 -1.6 -3.6 -12.2 -21.9 -12.2 -5.5
  Residential -2.6 -2.0 -4.7 5.5 -29.9 -29.0 -19.7
  Nonresidential 0.8 -1.2 -2.5 -23.7 -15.0 10.5 23.9
Public -1.2 0.6 -1.4 -4.1 2.2 6.6 13.1
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