Monday, January 04, 2010

Construction Spending Declines in November

by Bill McBride on 1/04/2010 10:23:00 AM

Through November construction spending has followed the expected script for 2009: a likely bottom for residential construction spending, and a collapse in private non-residential construction.

Residential construction spending was off slightly in November, and is now only 5.8% above the bottom earlier in 2009. I expect some residential spending growth in 2010, but the increases in spending will probably be sluggish until the large overhang of existing inventory is reduced.

Non-residential appeared flat in November, but that was only because of a downward revision to October spending. The collapse in non-residential construction spending continues ...

Construction Spending Click on graph for larger image in new window.

The first graph shows private residential and nonresidential construction spending since 1993. Note: nominal dollars, not inflation adjusted.

Residential construction spending decreased in November, and nonresidential spending continued to decline.

Private residential construction spending is now 62.9% below the peak of early 2006.

Private non-residential construction spending is 22.5% below the peak of October 2008.

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

Nonresidential spending is off 22.5% on a year-over-year (YoY) basis.

Residential construction spending is still off 22.2% from a year ago, but the negative YoY change is getting smaller.

For the first time since the housing bust started, nonresidential spending is off more on a YoY basis than residential.

Here is the report from the Census Bureau: November 2009 Construction at $900.1 Billion Annual Rate