Global| May 01 2008U.S. Construction Spending Off Sharply
by:Tom Moeller
|in:Economy in Brief
Summary
The value of construction put in place in March fell a more-than-expected 1.1% but February's level was revised up. The latest decline was the fifth in the last six months and the March level was 8.4% below the peak two years ago. The [...]
The value of construction put in place in March fell a more-than-expected 1.1% but February's level was revised up. The latest decline was the fifth in the last six months and the March level was 8.4% below the peak two years ago.
The value of residential building activity cratered 4.6% in March led by a 5.3% (-36.1% y/y) decline in building of single family units. That was similar to the decline in the prior several months. Building activity on multi-family units also slipped 0.5% (-17.0% y/y) and spending on improvements reversed nearly all of the prior month's jump and fell 4.8% (+10.4% 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 jumped 1.9% but three month growth of 9.5% is down from an 18.0% rise last year. A decline in multi-retail building of 2.7% (AR) during the last three months compared with a 14.5% rise last year. A 1.6% 3-month gain in commercial building was down from 13.4% growth last year. Growth in office building remained firm at 13.3% versus 19.6% growth last year.
Growth in public construction over the last three months of 5.0% compared to a 12.2% rise last year. Construction on highways & streets rose at a 10.1% rate during the last three months after last year's rise of 7.4%. (The value of construction on highways & streets is nearly one third of the value of total public construction spending.) Building activity of educational facilities fell at a 3.8% rate after last year's 12.6% rise.
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.
Maps and data that illustrate subprime and alt-A mortgage loan conditions across the United States, from the Federal Reserve, can be found here.
| Construction | March | February | Y/Y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Total | -1.1% | 0.4% | -3.4% | -2.7% | 5.6% | 10.7% |
| Private | -1.7% | 0.3% | -6.7% | -6.8% | 4.7% | 12.0% |
| Residential | -4.6% | 0.2% | -19.9% | -18.1% | 0.5% | 13.7% |
| Nonresidential | 1.9% | 0.6% | 15.4% | 18.0% | 15.2% | 7.8% |
| Public | 0.6% | 0.4% | 7.0% | 12.2% | 9.2% | 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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