Global| Nov 01 2006U.S. Construction Spending Down
by:Tom Moeller
|in:Economy in Brief
Summary
The value of construction put in place fell 0.3% during September after a slight decline the prior month which was downwardly revised. Consensus expectations had been for a 0.1% gain and it was the third decline in three months. [...]
The value of construction put in place fell 0.3% during September after a slight decline the prior month which was downwardly revised. Consensus expectations had been for a 0.1% gain and it was the third decline in three months.
Residential building dropped another sharp 1.1%, the sixth decline in as many months. New single family building fell an even harder 2.5% (-12.8% y/y) however spending on improvements rose 1.0%% (2.8% y/y) and recovered after two months of little change.
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.
Slowdown in Housing Won’t Shut Down Economic Growth from the Federal Reserve Bank of St. Louis can be found here.
Nonresidential building inched up 0.1% after a little revised 3.1% surge during August. Lodging jumped 2.8% (61.7% y/y) and office construction tacked on another 0.8% (28.0% y/y) to earlier monthly gains which ranged between two and eight percent. Multi-retail building boomed another 2.2% (44.8% y/y) though building by the factory sector slipped 0.6% (+22.2% y/y) after a 7.9% surge the prior month.
Public construction spending rose 0.9% but a previously reported 1.1% August increase was revised to just 0.3%. The 1.7% (+13.2% y/y) monthly decline in construction activity on highways & streets, nearly one third of the value of public construction spending, was the fourth in a row.
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.
The great turn-of-the-century housing boom from the Federal Reserve Bank of Chicago is available here.
| Construction Put-in-place | September | August | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Total | -0.3% | -0.0% | 2.9% | 10.7% | 11.5% | 5.6% |
| Private | -0.7% | -0.1% | 0.6% | 12.0% | 14.3% | 6.4% |
| Residential | -1.1% | -1.6% | -6.9% | 13.9% | 18.6% | 12.8% |
| Nonresidential | 0.1% | 3.1% | 19.2% | 7.4% | 5.3% | -4.8% |
| Public | 0.9% | 0.3% | 11.6% | 6.2% | 2.8% | 2.9% |
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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