Global| Nov 30 2007U.S. Construction Spending Down in October, But Stabilizing?
by:Tom Moeller
|in:Economy in Brief
Summary
The value of construction put in place fell again October. The 0.8% decline followed a modest 0.2% uptick during September but the three month growth in activity has stabilized at -1.0% (AR), an improvement from the double digit rate [...]
The value of construction put in place fell again October. The 0.8% decline followed a modest 0.2% uptick during September but the three month growth in activity has stabilized at -1.0% (AR), an improvement from the double digit rate of decline last Autumn.
Residential building dropped another 2.0% m/m and the three month change was -17.2% (AR), a stable rate of decline since the middle of last year. Building of new single family units, however, showed no sign of stabilizing or bottoming and produced a 4.0% (-26.4% y/y) fall m/m in October. To the upside, spending on improvements gained 0.7% (5.1% y/y) and the three month growth rate shot up to 23.5% (AR).
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.
Nonresidential building fell slightly for the first decline in about one year. Three month growth remained stable, however, at a positive 16.0% (AR). The 1.2% rise in office construction (20.3% y/y) lifted three month growth to 44.7%, and multi-retail building activity rose 1.6% (12.6% y/y). The shortfall in October nonresidential activity was due partly to a modest 0.1% (11.8% y/y) uptick in commercial construction which followed several months of little or negative change. Also, the 1.8% (20.9 y/y) rise in educational facility building followed two months of just slight increase.
Strength in public construction spending was evident in a 0.8% October rise and the firm three month growth rate of 12.3% was stable. Construction on highways & streets rose 0.8% (9.2% y/y) after two months of double digit gain. The value of construction on highways & streets is nearly one third of the value of total public construction spending. Construction spending on education again was firm and grew 2.1% (18.2% y/y).
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.
| October | September | Y/Y | 2006 | 2005 | 2004 | |
|---|---|---|---|---|---|---|
| Total | -0.8% | 0.2% | -0.6% | 5.6% | 10.7% | 11.0% |
| Private | -1.4% | -0.1% | -4.9% | 4.7% | 12.0% | 13.8% |
| Residential | -2.0% | -1.1% | -16.2% | 0.5% | 13.7% | 18.7% |
| Nonresidential | -0.5% | 1.5% | 17.5% | 15.2% | 7.8% | 3.8% |
| Public | 0.8% | 1.2% | 14.6% | 9.2% | 6.2% | 1.7% |
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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