Global| Oct 02 2006U.S. Construction Spending Up Unexpectedly
by:Tom Moeller
|in:Economy in Brief
Summary
The August value of construction put in place rose a modest 0.3% after a little revised 1.0% drop during July. Consensus expectations had been for a 0.4% decline. Despite the latest increase the level of 3Q activity remained 1.0% [...]
The August value of construction put in place rose a modest 0.3% after a little revised 1.0% drop during July. Consensus expectations had been for a 0.4% decline. Despite the latest increase the level of 3Q activity remained 1.0% below 2Q.
Residential building dropped another 1.4%, the fifth sharp slide in as many months. New single family building dropped 2.7% (-9.3% y/y) and the August level was down 12.5% from the peak in February. Moving in the other direction the value of spending on improvements rose 1.1%% (0.8% 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.
Nonresidential building jumped 3.4% after an upwardly revised 1.3% July rise. Office construction surged 3.1% (27.5% y/y) while multi-retail building jumped 10.8% (51.1% y/y). Building by the factory sector surged 8.2% (28.4% y/y) to the highest level since 2001.
Public construction spending reversed all of the prior month's revised decline with a 1.1% increase due to across the board gains. Construction activity on highways & streets, nearly one third of the value of public construction spending, rose 0.4% (17.6% 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.
Are Investors More Risk-Averse During Recession? from the Federal Reserve Bank of St. Louis can be found here.
| Construction Put-in-place | August | July | Y/Y | 2005 | 2004 | 2003 |
|---|---|---|---|---|---|---|
| Total | 0.3% | -1.0% | 4.5% | 10.7% | 11.5% | 5.6% |
| Private | 0.1% | -1.0% | 2.9% | 12.0% | 14.3% | 6.4% |
| Residential | -1.4% | -2.2% | -5.1% | 13.9% | 18.6% | 12.8% |
| Nonresidential | 3.4% | 1.3% | 23.8% | 7.4% | 5.3% | -4.8% |
| Public | 1.1% | -1.2% | 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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