Monday, November 01, 2010

Private Construction Spending Flat in September: July and August Revised Down

by Bill McBride on 11/01/2010 10:53:00 AM

The Census Bureau reported overall construction spending increased in September compared to August.

[C]onstruction spending during September 2010 was estimated at a seasonally adjusted annual rate of $801.7 billion, 0.5 percent (±1.9%)* above the revised August estimate of $797.5 billion.
However private construction spending was about the same as the downwardly revised August rate:
Spending on private construction was at a seasonally adjusted annual rate of $482.0 billion, nearly the same as (±1.1%)* the revised August estimate of $481.9 billion. [revised down from $498.2 billion]
Private Construction Spending Click on graph for larger image in new window.

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

Residential spending is 65.7% below the peak early 2006, and non-residential spending is 39.5% from the peak in January 2008.

The downward revisions to construction spending in July and August were significant.

  • Private non-residential construction spending was revised down from an average rate of $261.6 billion in July and August to an average rate of $253.3 billion for both months.

  • Private residential construction spending was revised down from an average rate of $238.8 billion in July and August to a $229.7 billion rate for both months.

    These downward revisions will negatively impact Q3 GDP for both residential investment, and non-residential investment in structures.