Monday, January 04, 2016

Construction Spending decreased 0.4% in November, Up 10.5% YoY

by Bill McBride on 1/04/2016 11:54:00 AM

The Census Bureau reported that overall construction spending decreased in November compared to October:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during November 2015 was estimated at a seasonally adjusted annual rate of $1,122.5 billion, 0.4 percent below the revised October estimate of $1,127.0 billion. The November figure is 10.5 percent above the November 2014 estimate of $1,016.1 billion.

During the first 11 months of this year, construction spending amounted to $1,011.9 billion, 10.7 percent (±1.2%) above the $913.9 billion for the same period in 2014.
Both private spending and public spending decreased:
Spending on private construction was at a seasonally adjusted annual rate of $828.2 billion, 0.2 percent below the revised October estimate of $829.7 billion. ...

n November, the estimated seasonally adjusted annual rate of public construction spending was $294.3 billion, 1.0 percent below the revised October estimate of $297.3 billion.
emphasis added
Note: There were substantial upward revisions to private residential construction spending for the last few years.

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 37% below the bubble peak.

Non-residential spending is only 3% below the peak in January 2008 (nominal dollars).

Public construction spending is now 10% below the peak in March 2009 and about 11% 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 11%. Non-residential spending is up 14% year-over-year. Public spending is up 6% year-over-year.

Looking forward, all categories of construction spending should increase 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 well below the consensus forecast of a 0.7% increase, however spending for prior months was revised up sharply.