by Bill McBride on 2/01/2013 02:31:00 PM
Friday, February 01, 2013
Catching up ...
There are a few key themes:
1) Private residential construction is usually the largest category for construction spending, but there was a huge collapse in spending following the housing bubble (as expected). This is now the largest category once again. Usually private residential construction leads the economy, so this is a good sign going forward.
2) Private non-residential construction spending usually lags the economy. There was some increase this time, mostly related to energy and power - but the key sectors of office, retail and hotels are still at very low levels.
3) Public construction spending has declined to 2006 levels (not adjusted for inflation). This has been a drag on the economy for 3+ years.
The Census Bureau reported that overall construction spending increased in December:
The U.S. Census Bureau of the Department of Commerce announced today that construction spending during December 2012 was estimated at a seasonally adjusted annual rate of $885.0 billion, 0.9 percent above the revised November estimate of $876.9 billion. The December figure is 7.8 percent above the December 2011 estimate of $820.6 billion.Private construction spending increased, but public construction spending declined:
The value of construction in 2012 was $850.2 billion, 9.2 percent above the $778.2 billion spent in 2011.
Spending on private construction was at a seasonally adjusted annual rate of $614.9 billion, 2.0 percent above the revised November estimate of $602.9 billion. ...Click on graph for larger image.
In December, the estimated seasonally adjusted annual rate of public construction spending was $270.1 billion, 1.4 percent below the revised November estimate of $274.1 billion.
This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.
Private residential spending is 54% below the peak in early 2006, and up 39% from the post-bubble low. Non-residential spending is 26% below the peak in January 2008, and up about 35% from the recent low.
Public construction spending is now 17% below the peak in March 2009 and at the lowest level since 2006 (not inflation adjusted).
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 24%. Non-residential spending is up 8% year-over-year mostly due to energy spending (power and electric). Public spending is down 6% year-over-year.
This was a fairly strong report - except for public construction spending - and this report suggests an upward revision to Q4 GDP.