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Economy in Brief

U.S. Construction Spending Falls Sharply
by Tom Moeller  February 1, 2011

Record cold temperatures kept builders off the job during December. The value of construction put-in-place plunged 2.5% following a downwardly revised 0.2% slip in November. The latest figure fell well short of expectations for a 0.1% uptick. Residential building activity felt the worst of the downward pressure and slumped 4.1%. Spending on improvements posted an 8.3% decline (-6.0% y/y) while multi-family building was off 5.3% (-27.7% y/y). Single-family building curiously ticked up 0.5% (-4.3% y/y), though not seasonally adjusted activity fell 15.1%, roughly the same as during December 2009.

Nonresidential building slipped 0.5% after a 0.7% November uptick. Building in the transportation sector recovered 2.4% y/y. Highways & streets (+7.6% y/y) and power (13.0% y/y) remained strong. Commercial building fell 18.6% y/y accompanied by a one-quarter y/y drop in office building. Hurt by lower tax revenues, educational building was off one-third from its late-2008 peak and health care building was down 5.7% y/y.

Public construction activity fell 2.8% during December adding to downwardly revised declines in earlier months. Power facilities building grew by three-quarters from last year. Also firm were sewerage & waste disposal (3.2% y/y) and highways & streets (7.5% y/y). Highway construction amounts to one-quarter of the dollars spent on public sector building. Working the other way were commercial (-19.3% y/y), office (-23.2% y/y), and educational building (-11.2% y/y) where growth was negative.

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

Construction Put in Place(%) Dec Nov Oct Y/Y 2010 2009 2008
Total -2.5 -0.2 1.1 -6.4 -10.4 -14.9 -7.5
Private -2.2 0.7 2.2 -9.8 -14.4 -21.9 -12.2
 Residential -4.1 0.7 4.0 -6.8 -1.5 -29.9 -29
 Nonresidential -0.5 0.7 0.7 -12.3 -23.5 -15.0 10.5
Public -2.8 -1.7 -0.7 -0.3 -2.9 2.2 6.6
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