by Bill McBride on 2/02/2015 11:07:00 AM
Monday, February 02, 2015
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 2014 was estimated at a seasonally adjusted annual rate of $982.1 billion, 0.4 percent above the revised November estimate of $978.6 billion. The December figure is 2.2 percent above the December 2013 estimate of $961.2 billion. ... The value of construction in 2014 was $961.4 billion, 5.6 percent above the $910.8 billion spent in 2013.Both private and public spending increased in December:
Spending on private construction was at a seasonally adjusted annual rate of $698.6 billion, 0.1 percent above the revised November estimate of $698.2 billion. ...Note: Non-residential for offices and hotels is increasing, but spending for oil and gas is generally declining. Early in the recovery, there was a surge in non-residential spending for oil and gas (because prices increased), but now, with falling prices, oil and gas is a drag on overall construction spending.
In December, the estimated seasonally adjusted annual rate of public construction spending was $283.5 billion, 1.1 percent above the revised November estimate of $280.4 billion.
As an example, construction spending for lodging is up 18% year-over-year, whereas spending for power (includes oil and gas) construction peaked in mid-2014 and is down 8% year-over-year (and will fall further in the coming months).
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 48% below the peak in early 2006 - but up 53% from the post-bubble low.
Non-residential spending is 16% below the peak in January 2008, and up about 55% from the recent low.
Public construction spending is now 13% below the peak in March 2009 and about 9% above the post-recession low.
The second graph shows the year-over-year change in construction spending.
On a year-over-year basis, private residential construction spending is down 4%. Non-residential spending is up 5% year-over-year. Public spending is up 7% year-over-year.
Looking forward, all categories of construction spending should increase in 2015. Residential spending is still very low, non-residential is starting to pickup (except oil and gas), and public spending has probably hit bottom after several years of austerity.
This was below the consensus forecast of a 0.6% increase, however there were some minor upward revisions to spending in October and November.
Posted by Bill McBride on 2/02/2015 11:07:00 AM