Global| Nov 03 2008U.S. Construction Spending Fell Further
by:Tom Moeller
|in:Economy in Brief
Summary
The value of construction put in place fell 0.3% during September. That reversed an August rise which was revised up slightly and the September decline was less than expectations for a 0.8% drop.Year-to-year, the decline in [...]
The value of construction put in place fell 0.3% during September. That reversed an August rise which was revised up slightly and the September decline was less than expectations for a 0.8% drop.Year-to-year, the decline in construction activity remained steady at a -6.6% pace.
A drop in the value of residential building activity led the September decline in overall construction. The 1.3% m/m fall reversed most an August increase and it was led by a 4.7% (-41.3% y/y) drop in single-family construction, off by two-thirds from its peak in early-2006. Building activity on multi-family units reversed nearly half of the August decline with a 2.7% (-1.7% y/y) rise while spending on improvements added to an August increase, up 2.4% m/m (-6.6% y/y).
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.
The value of nonresidential building activity recovered 1.2% after an August decline. A 4.4% (5.7% y/y) rise in the educational category led the increase while airport building rose by nearly one-half. Increases here were offset by a 2.3% (-11.3% y/y) decline in the multi-retail category. Spending on health care facilities inched up 0.1% (4.5% y/y) while office construction increased 1.7% (7.4% y/y).
Public construction reversed its August gain with a 1.3% decline. The value of construction spending on highways & streets led the weakness with a 1.5% drop (+1.7% y/y). The value of construction on highways & streets is roughly one-third of the value of total public construction spending. Building activity of office space continued firm and rose 1.6% (34.4% y/y) but spending on health care facilities fell 3.5% (+4.0% y/y).
The more detailed categories of construction 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.
| Construction (%) | September | August | Y/Y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Total | -0.3 | 0.3 | -6.6 | -2.7 | 6.3 | 11.2 |
| Private | 0.1 | -0.1 | -10.3 | -6.9 | 5.5 | 12.7 |
| Residential | -1.3 | 1.9 | -27.7 | -19.8 | 1.0 | 14.9 |
| Nonresidential | 1.2 | -1.6 | 11.4 | 19.6 | 16.2 | 7.8 |
| Public | -1.3 | 1.3 | 3.8 | 12.3 | 9.3 | 6.2 |
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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