Thursday, December 01, 2016

Construction Spending increased in October

by Bill McBride on 12/01/2016 12:19:00 PM

Earlier today, the Census Bureau reported that overall construction spending increased in October:

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during October 2016 was estimated at a seasonally adjusted annual rate of $1,172.6 billion, 0.5 percent above the revised September estimate of $1,166.5 billion. The October figure is 3.4 percent above the October 2015 estimate of $1,134.4 billion.

During the first 10 months of this year, construction spending amounted to $972.2 billion, 4.5 percent above the $930.7 billion for the same period in 2015.
Private spending decreased and public spending increased in October:
Spending on private construction was at a seasonally adjusted annual rate of $885.9 billion, 0.2 percent below the revised September estimate of $887.4 billion ...

In October, the estimated seasonally adjusted annual rate of public construction spending was $286.8 billion, 2.8 percent above the revised September estimate of $279.1 billion.
emphasis added
September was revised up to no change from a 0.5% decrease, and August revised up sharply to a 0.5% increase from -0.5%.

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 generally increasing, but is 31% below the bubble peak.

Non-residential spending is now 1% above the previous peak in January 2008 (nominal dollars).

Public construction spending is now 12% below the peak in March 2009, and 9% above the austerity low in February 2014.

Year-over-year 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 5%. Non-residential spending is up 5% year-over-year. Public spending is down 1% year-over-year.

Looking forward, all categories of construction spending should increase in the coming year. Residential spending is still fairly low, non-residential is increasing - although there has been a recent decline in public spending.

This was slightly below the consensus forecast of a 0.6% increase for October, however spending for August and September were revised up.  A solid report.