Monday, November 02, 2015

Construction Spending increased 0.6% in September, Up 14.1% YoY

by Bill McBride on 11/02/2015 11:31:00 AM

The Census Bureau reported that overall construction spending increased in September:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during September 2015 was estimated at a seasonally adjusted annual rate of $1,094.2 billion, 0.6 percent above the revised August estimate of $1,087.5 billion. The September figure is 14.1 percent above the September 2014 estimate of $959.2 billion.
Both private spending and public spending increased:
Spending on private construction was at a seasonally adjusted annual rate of $794.2 billion, 0.6 percent above the revised August estimate of $789.7 billion. ...

In September, the estimated seasonally adjusted annual rate of public construction spending was $300.0 billion, 0.7 percent above the revised August estimate of $297.8 billion.
emphasis added
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.

As an example, construction spending for private lodging is up 33% year-over-year, whereas spending for power (includes oil and gas) construction peaked in mid-2014 and is down 11% year-over-year.

Private Construction Spending 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 increasing, but is 42% below the bubble peak.

Non-residential spending is only 4% below the peak in January 2008 (nominal dollars).

Public construction spending is now 8% below the peak in March 2009 and about 14% above the post-recession low.

Private Construction SpendingThe second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is up 17%. Non-residential spending is up 15% year-over-year. Public spending is up 9% year-over-year.

Looking forward, all categories of construction spending should increase this year and in 2016. Residential spending is still very low, non-residential is increasing (except oil and gas), and public spending has also increasing after several years of austerity.

This was at the consensus forecast of a 0.4% increase, also spending for July and August were revised up slightly.  Another solid construction report.