Thursday, April 01, 2010

Construction Spending Declines in February

by Bill McBride on 4/01/2010 10:20:00 AM

Private residential construction spending has turned down again over the last few months. I expect some growth in residential spending in 2010, but the increases will probably be sluggish until the large overhang of existing inventory is reduced.

Private non-residential spending decreased in February, and is now at the lowest level since July 2006. 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.

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

Private non-residential construction spending is 29.0% below the peak of late 2008.

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

Nonresidential spending is off 24.3% on a year-over-year (YoY) basis.

Residential construction spending is down 3.8% from a year ago, and the negative YoY change is getting smaller.

Residential spending will probably exceed non-residential spending later this year - mostly because of continued declines in non-residential spending as major projects are completed.

Here is the report from the Census Bureau: February 2010 Construction at $846.2 Billion Annual Rate

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during February 2010 was estimated at a seasonally adjusted annual rate of $846.2 billion, 1.3 percent below the revised January estimate of $857.8 billion. The February figure is 12.8 percent below the February 2009 estimate of $970.4 billion.