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Economy in Brief

U.S. Construction Spending Increases Modestly
by Tom Moeller   December 01, 2010

The value of construction put-in-place rose 0.7% during October following an upwardly revised 0.7% September gain. The figure was better than Consensus expectations for a 0.4% decline. These recent, small monthly changes stand in sharp contrast to larger movements earlier in 2010. To the upside has been residential building activity which gained 2.5% in October. Spending on improvements led with a 6.2% gain (-10.7% y/y). Multi-family building also increased 3.2% but it remained off by one-third from last year. Single-family building fell another 1.2% (-3.0% y/y) after its improvement late last year and early this year.

Nonresidential building slipped 0.7% after two months of slight increase. The y/y decline moderated to 20.7% as building in the transportation sector fell a modest 2.6% y/y. Power (-9.0% y/y) and communication (-9.0% y/y) sector declines also moderated. Continued strong declines in office (-32.0% y/y) and multi-retail (-17.1% y/y) and other commercial offset the one-third y/y gain in automotive sector building.

Public construction activity rose 0.4% during October and 2.2% y/y. Power facilities building grew by one-half from last year; also firm were sewerage & waste disposal (13.6% y/y), water supply (4.2% y/y), health care (2.9% y/y) and highways & streets (1.5% y/y). Highway construction  amounts to one-quarter of the dollars spent on public sector building. Working the other way were commercial (-12.2% y/y), office (-13.0% y/y), and educational building (-7.4% y/y) where growth was negative.

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

Why Aren't Banks Lending More? The Role of Commercial Real Estate from the Federal Reserve Bank of Chicago is available here.

Construction Put in Place (%) October September August Y/Y 2009 2008 2007
Total 0.7 0.7 -0.9 -9.3 -14.9 -7.5 -1.4
Private 0.8 0.4 -2.8 -15.6 -21.9 -12.2 -5.5
  Residential 2.5 0.6 -6.2 -9.2 -29.9 -29.0 -19.7
  Nonresidential -0.7 0.2 0.4 -20.7 -15.0 10.5 23.9
Public 0.4 1.2 2.1 2.2 2.2 6.6 13.1
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