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Wednesday, December 01, 2010

Private Construction Spending increases in October

by Calculated Risk on 12/01/2010 11:00:00 AM

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

[C]onstruction spending during October 2010 was estimated at a seasonally adjusted annual rate of $802.3 billion, 0.7 percent (±1.4%)* above the revised September estimate of $797.1 billion.
Private construction spending also increased in October:
Spending on private construction was at a seasonally adjusted annual rate of $481.8 billion, 0.8 percent (±1.1%)* above the revised September estimate of $477.8 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.

Private residential spending increased in October; private non-residential construction spending is still declining. Residential spending is 66% below the peak early 2006, and non-residential spending is 39% below the peak in January 2008.

Residential investment (RI) will probably be a minimal drag on Q4 GDP growth (or even make a slight positive contribution), and even though the recovery in RI will be sluggish, I expect RI will make a positive contribution to GDP growth in 2011. Non-residential investment will probably bottom sometime next year, but stay depressed for some time.