Global| Jan 03 2007U.S. Construction Spending Off Again
by:Tom Moeller
|in:Economy in Brief
Summary
The value of construction put in place in November fell 0,2% though the prior month's sharp drop was revised to more mild 0.3% dip. Nevertheless, it was the sixth decline in the last seven months. Consensus expectations had been for a [...]
The value of construction put in place in November fell 0,2% though the prior month's sharp drop was revised to more mild 0.3% dip. Nevertheless, it was the sixth decline in the last seven months. Consensus expectations had been for a 0.5% November decline.
Residential building again fell sharply. The 1.6% decline was the eighth consecutive monthly decline and it lowered the level of residential construction activity 11.3% below last December's peak. New single family building dropped 3.1% after a 3.8% slip during October and it lowered activity 20.8% below the peak this past February. Spending on improvements again made up for some that lost work and rose 0.6% (6.7% 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.
Housing: Boom or Bubble? from the Federal Reserve Bank of Philadelphia is available here.
Nonresidential building rose 1.4% after an upwardly revised 0.5% October uptick. Lodging construction surged 3.9% (71.4% y/y) after a 7.8% October spike and office construction rose a solid 1.0% (30.9% y/y) after an upwardly revised October gain. Multi-retail building eased 0.6% (28.3% y/y) and gave back half of October's increase.
Public construction spending increased 1.0% after an upwardly revised 1.9% October surge. Spending on highways & streets, nearly one third of the value of public construction spending, ticked up 0.4% (13.7% y/y) but October's gain was revised up to 2.5%.
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.
| Construction Put-in-place | November | October | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Total | -0.2% | -0.3% | 0.1% | 10.7% | 11.5% | 5.6% |
| Private | -0.6% | -1.0% | -2.7% | 12.0% | 14.3% | 6.4% |
| Residential | -1.6% | -1.7% | -11.1% | 13.9% | 18.6% | 12.8% |
| Nonresidential | 1.4% | 0.5% | 18.0% | 7.4% | 5.3% | -4.8% |
| Public | 1.0% | 1.9% | 10.6% | 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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