Tuesday, July 01, 2008

Construction Spending in May

by Bill McBride on 7/01/2008 10:00:00 AM

Construction spending declined in May for residential, but increased slightly for non-residential private construction.

From the Census Bureau: May 2008 Construction at $1,085.2 Billion Annual Rate

Spending on private construction was at a seasonally adjusted annual rate of $784.2 billion, 0.7 percent below the revised April estimate of $789.4 billion.

Residential construction was at a seasonally adjusted annual rate of $378.9 billion in May, 1.6 percent below the revised April estimate of $385.1 billion.

Nonresidential construction was at a seasonally adjusted annual rate of $405.3 billion in May, 0.2 percent above the revised April estimate of $404.3 billion.
Construction Spending Click on graph for larger image in new window.

The graph shows private residential and nonresidential construction spending since 1993. With revisions, private non-residential construction spending has now passed residential construction spending for the first time (since the Census Bureau started tracking spending).

Nonresidential spending has been strong as builders complete projects, but there is substantial evidence of a looming slowdown - less lending for new projects, less work for architects - and the expected slowdown in non-residential spending will happen in the 2nd half of 2008.

Construction Spending
The second graph shows the year-over-year change for private residential and non-residential construction spending.

The YoY change in non-residential spending is starting to slow down and will probably turn negative later this year.