Global| Apr 01 2008U.S. Construction Spending Slipped; Nonresidential Activity Slackened
by:Tom Moeller
|in:Economy in Brief
Summary
The value of construction put in place slipped 0.3% during February and January was revised to less of a decline of 1.0%. The latest decline was the fifth consecutive monthly drop and the level was 8.5% below the March 2006 peak. The [...]
The value of construction put in place slipped 0.3% during February and January was revised to less of a decline of 1.0%. The latest decline was the fifth consecutive monthly drop and the level was 8.5% below the March 2006 peak.
The value of nonresidential building activity ticked down 0.1% after a 1.0% January decline which was half that reported initially. Momentum here recently has diminished substantially. Three month growth in activity is -5.3%. Education facility building slipped 0.2% (+17.3% y/y) after a 2.4% January surge. Spending in the factory sector rose 2.7% (27.4% y/y) and made up a revised 1.6% decline in January. Office construction fell 2.2% (+6.4% y/y) and commercial construction rose 2.6% (2.1% y/y).
The value of residential building activity fell another 0.9%. Construction activity on new single family units collapsed an additional 5.7% (-33.6% y/y). Building activity on multi-family units also slipped 0.3% (-18.5% y/y) but spending on improvements surged 5.1% (8.8% 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.
Public construction spending rose a slight 0.4% for the second month. Construction on highways & streets rose 0.9% (3.7% y/y) after a very much upwardly revised 0.5% January increase. The value of construction on highways & streets is nearly one third of the value of total public construction spending. Building activity of educational facilities slipped 0.2% (+15.0% 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.
| Construction | February | January | Y/Y | 2007 | 2006 | 2005 |
|---|---|---|---|---|---|---|
| Total | -0.3% | -1.0% | -3.5% | -2.7% | 5.6% | 10.7% |
| Private | -0.5% | -1.5% | -7.1% | -6.8% | 4.7% | 12.0% |
| Residential | -0.9% | -1.9% | -18.8% | -18.1% | 0.5% | 13.7% |
| Nonresidential | -0.1% | -1.0% | 13.2% | 18.0% | 15.2% | 7.8% |
| Public | 0.4% | 0.4% | 8.2% | 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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