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Tuesday, September 04, 2007

July Construction Spending

by Calculated Risk on 9/04/2007 10:00:00 AM

From the Census Bureau: July 2007 Construction Spending at $1,169.1 Billion Annual Rate

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during July 2007 was estimated at a seasonally adjusted annual rate of $1,169.1 billion, 0.4 percent below the revised June estimate of $1,173.2 billion. The July figure is 2.0 percent below the July 2006 estimate of $1,192.9 billion.

During the first 7 months of this year, construction spending amounted to $657.7 billion, 3.4 percent below the $680.9 billion for the same period in 2006.
...
[Private] Residential construction was at a seasonally adjusted annual rate of $534.0 billion in July, 1.4 percent below the revised June estimate of $541.8 billion.

[Private] Nonresidential construction was at a seasonally adjusted annual rate of $346.0 billion in July, 0.4 percent above the revised June estimate of $344.5 billion.
Private Construction Spending Click on graph for larger image.

This graph shows private construction spending for residential and non-residential (SAAR in Billions). While private residential spending has declined significantly, spending for private non-residential construction has been strong.

The second graph shows the YoY change for both categories of private construction spending.

YoY Change Private Construction Spending The normal historical pattern is for non-residential construction spending to follow residential construction spending. However, because of the large slump in non-residential construction following the stock market "bust", it is possible there is more pent up demand than usual - and that the non-residential boom will continue for a longer period than normal.

The question is: Will we see the normal pattern? I think the answer is yes.