by Bill McBride on 10/01/2012 11:36:00 AM
Monday, October 01, 2012
Note: There were upward revisions to construction spending for June and July (especially for residential investment). Without the upward revisions, construction spending would have increased in August compared to July.
This morning the Census Bureau reported that overall construction spending decreased in August:
The U.S. Census Bureau of the Department of Commerce announced today that construction spending during August 2012 was estimated at a seasonally adjusted annual rate of $837.1 billion, 0.6 percent below the revised July estimate of $842.0 billion. The August figure is 6.5 percent above the August 2011 estimate of $786.3 billion.Both private construction spending and public spending declined:
Spending on private construction was at a seasonally adjusted annual rate of $562.2 billion, 0.5 percent below the revised July estimate of $564.8 billion. ... In August, the estimated seasonally adjusted annual rate of public construction spending was $274.9 billion, 0.8 percent below the revised July estimate of $277.2 billion.Click on graph for larger image.
This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.
Private residential spending is 60% below the peak in early 2006, and up 23% from the post-bubble low. Non-residential spending is 30% below the peak in January 2008, and up about 27% from the recent low.
Public construction spending is now 16% below the peak in March 2009 and near the post-bubble low.
The second graph shows the year-over-year change in construction spending.
On a year-over-year basis, private residential construction spending is now up 18%. Non-residential spending is also up 7% year-over-year mostly due to energy spending (power and electric). Public spending is down 3% year-over-year.
UPDATE: Apparently I wasn't clear - spending in August would have been up compared to July without the upward revision to July spending. With both June and July revised up, this report was decent. Residential construction spending was up in August, and the solid year-over-year increase in private residential investment is a positive for the economy (the increase in 2010 was related to the tax credit).