Global| Aug 01 2006U.S. Construction Spending Supported By Nonresidential
by:Tom Moeller
|in:Economy in Brief
Summary
The value of construction put in place rose 0.3% in June following a slight May decline that was upwardly revised. Consensus expectations had been for a 0.1% increase. Another strong gain in nonresidential building, up 2.7%, bolstered [...]
The value of construction put in place rose 0.3% in June following a slight May decline that was upwardly revised. Consensus expectations had been for a 0.1% increase.
Another strong gain in nonresidential building, up 2.7%, bolstered the June total. Office construction jumped 1.9% (12.6% y/y) while multi-retail building surged another 3.1% (52.5% y/y) and a 10.5% spike during May was double the initial estimate. Building by the factory sector surged 8.1% (34.7% y/y).
Residential building activity fell for the third straight month. The 1.0% decline was led by 2.1% drop in new single family building (-1.2% y/y). That's the first y/y decline since late 2000. Spending on multi-family projects ticked up 0.1% (14.7% y/y) while the value of spending on improvements jumped 1.6% (-1.6% y/y) but the prior month's surge was revised away.
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. During April and May the value of residential building activity was down 1.3% from the 1Q average.
Public construction spending increased 0.8%. Construction activity on highways & streets, nearly one third of the value of public construction spending, rose just 0.1% (19.7% y/y) but the prior month's 0.1% gain reported initially was revised to a 4.3% surge.
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 | June | May | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Total | 0.3% | -0.0% | 6.8% | 10.7% | 11.5% | 5.6% |
| Private | 0.1% | -0.5% | 6.0% | 12.0% | 14.3% | 6.4% |
| Residential | -1.0% | -1.4% | -0.1% | 13.9% | 18.6% | 12.8% |
| Nonresidential | 2.7% | 1.6% | 21.6% | 7.4% | 5.3% | -4.8% |
| Public | 0.8% | 1.6% | 9.7% | 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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