by Calculated Risk on 1/05/2009 10:00:00 AM
Monday, January 05, 2009
Construction Spending Declines in November
From the Census Bureau: November 2008 Construction at $1,078.4 Billion Annual Rate
Spending on private construction was at a seasonally adjusted annual rate of $756.4 billion, 1.5 percent (±1.1%) below the revised October estimate of $767.7 billion. Residential construction was at a seasonally adjusted annual rate of $328.3 billion in November, 4.2 percent (±1.3%) below the revised October estimate of $342.6 billion. Nonresidential construction was at a seasonally adjusted annual rate of $428.2 billion in November, 0.7 percent (±1.1%)* above the revised October estimate of $425.1 billion.
![Construction Spending](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjqCtRzgbcmMDcrKkl6iUP_NM1nGOVJBMjosd7JkbsjQZJZO-3Hk3VpN0m41ts5a7JGDWBMRMKpdiDH0mhndIZKi3QpXAuX0yM1Dfsr5ZMAK-fWyaaiCRUfMSCo-P3k-imVZQ0N/s320/CSNov2008.jpg)
The first graph shows private residential and nonresidential construction spending since 1993.
Nonresidential spending is still holding up as builders complete projects, but there is substantial evidence of a slowdown - less lending for new projects, less work for architects - and it appears that non-residential spending has peaked. On the graph nonresidential spending has been relatively flat for the last few months, but I expect some serious cliff diving over the next 18 months.
![Construction Spending](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgD-KCYbSuD5s2ZzvOm1VcXHbp_uoj1c9s9zIDx19gZwobY2bCNIJ8cu8blIjF7aAOjMxtq9f_EUoYBT7fG86zqoHrh9z4XLHaw42pSY2kXS4oXl4U3AdLkqKEj8Ud7kMOiB7Wf/s320/CSNov2008YOY.jpg)
The second graph shows the year-over-year change for private residential and non-residential construction spending.
The YoY change in non-residential spending is starting to slow down and will probably turn negative early in 2009. Residential construction spending is still declining, but the rate of decline has slowed.
Also - it now looks like investment in non-residential structures might be neutral for GDP in Q4.