by Bill McBride on 6/01/2015 12:20:00 PM
Monday, June 01, 2015
Earlier today, the Census Bureau reported that overall construction spending increased in April:
The U.S. Census Bureau of the Department of Commerce announced today that construction spending during April 2015 was estimated at a seasonally adjusted annual rate of $1,006.1 billion, 2.2 percent above the revised March estimate of $984.0 billion. The April figure is 4.8 percent above the April 2014 estimate of $960.3 billion.Both Private and public spending increased:
Spending on private construction was at a seasonally adjusted annual rate of $725.2 billion, 1.8 percent above the revised March estimate of $712.1 billion. ...Note: Non-residential for offices and hotels is generally increasing, but spending for oil and gas has been declining. Early in the recovery, there was a surge in non-residential spending for oil and gas (because oil prices increased), but now, with falling prices, oil and gas is a drag on overall construction spending.
In April, the estimated seasonally adjusted annual rate of public construction spending was $280.9 billion, 3.3 percent above the revised March estimate of $271.9 billion.
As an example, construction spending for private lodging is up 20% year-over-year, whereas spending for power (includes oil and gas) construction peaked in mid-2014 and is down 31% year-over-year.
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 has been moving sideways recently, and is 48% below the bubble peak.
Non-residential spending is 14% below the peak in January 2008.
Public construction spending is now 14% below the peak in March 2009 and about 7% 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 2%. Non-residential spending is up 13% year-over-year. Public spending is up 3% 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 well above the consensus forecast of a 0.7% increase, and spending for February and March were revised up. A solid report.
Posted by Bill McBride on 6/01/2015 12:20:00 PM