by Bill McBride on 3/01/2013 12:35:00 PM
Friday, March 01, 2013
Catching up ...
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). Private residential is now about even with private non-residential, and residential will probably be the largest category of construction spending in 2013. 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 almost 4 years.
The Census Bureau reported that overall construction spending decreased in January:
The U.S. Census Bureau of the Department of Commerce announced today that construction spending during January 2013 was estimated at a seasonally adjusted annual rate of $883.3 billion, 2.1 percent below the revised December estimate of $902.6 billion. The January figure is 7.1 percent above the January 2012 estimate of $824.7 billion.Private construction spending decreased due to less spending on power and electric, and public construction spending declined too:
Spending on private construction was at a seasonally adjusted annual rate of $614.2 billion, 2.6 percent below the revised December estimate of $630.9 billion. Residential construction was at a seasonally adjusted annual rate of $304.6 billion in January, nearly the same as the revised December estimate of $304.7 billion. ...Click on graph for larger image.
In January, the estimated seasonally adjusted annual rate of public construction spending was $269.0 billion, 1.0 percent below the revised December estimate of $271.7 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 55% below the peak in early 2006, and up 37% from the post-bubble low. Non-residential spending is 25% below the peak in January 2008, and up about 37% 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 22%. Non-residential spending is up 4% year-over-year mostly due to energy spending (power and electric). Public spending is down 3% year-over-year.