Tuesday, March 01, 2016

Construction Spending increased 1.5% in January

by Bill McBride on 3/01/2016 10:59:00 AM

The Census Bureau reported that overall construction spending increased 1.5% in January compared to December:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during January 2016 was estimated at a seasonally adjusted annual rate of $1,140.8 billion, 1.5 percent above the revised December estimate of $1,123.5 billion. The January figure is 10.4 percent above the January 2015 estimate of $1,033.3 billion.
Both private and public spending increased in January:
Spending on private construction was at a seasonally adjusted annual rate of $831.4 billion, 0.5 percent above the revised December estimate of $827.3 billion. ...

In January, the estimated seasonally adjusted annual rate of public construction spending was $309.4 billion, 4.5 percent above the revised December estimate of $296.2 billion.
emphasis added
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 36% below the bubble peak.

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

Public construction spending is now 5% below the peak in March 2009.  The sharp increase in public spending in January was due to more spending on streets and highways (up 34% year-over-year).

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 8%. Non-residential spending is up 11% year-over-year. Public spending is up 13% 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 is also increasing after several years of austerity.

This was well above the consensus forecast of a 0.5% increase for January, and construction spending for November and December were revised up.